UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB/A
AMENDMENT NO. 1
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS UNDER
SECTION 12(b) or 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
NATIONAL SCIENTIFIC CORPORATION
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(Name of Small Business Issuer in its Charter)
Texas 86-0837077
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4455 East Camelback Road, Suite E160 Phoenix, AZ 85018
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(Address of principal executive offices) (Zip Code)
(602) 954-1492
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Issuer's telephone number
Securities to be registered pursuant to Section 12(b) of the Act.
Preferred Stock, $0.10 par value
Securities to be registered pursuant to Section 12(g) of the Act.
Common Stock, $0.01 par value
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TABLE OF CONTENTS
PART I
Item 1. Description of Business ....................................... 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................... 9
Item 3. Description of Property ....................................... 11
Item 4. Security Ownership of Certain Beneficial Owners
and Management ................................................ 12
Item 5. Directors, Executive Officers, Promoters and
Control Persons ............................................... 12
Item 6. Executive Compensation ........................................ 14
Item 7. Certain Relationships and Related Transactions ................ 14
Item 8. Description of Securities ..................................... 15
PART II
Item 1. Market Price of and Dividends on the Company's Common
Equity and Other Shareholder Matters .......................... 16
Item 2. Legal Proceedings ............................................. 17
Item 3. Changes in and Disagreements with Accountants ................. 17
Item 4. Recent Sales of Unrestricted Securities ....................... 17
Item 5. Indemnification of Directors and Officers ..................... 17
PART F/S
Index to Financial Statements ......................................... F-1
PART III
Item 1. Index to Exhibits
SIGNATURES
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
National Scientific Corporation, a Texas corporation ("NSC"), was originally
formed in 1953 as American Mortgage Company, Inc. In 1993, NSC became a
subsidiary of A.F.M.S., Inc. In 1994, U.S. Network Funding, Inc. acquired
A.F.M.S., Inc., including controlling interest in American Mortgage Company,
Inc. In 1995, U.S. Network Funding, Inc., divested itself of A.F.M.S., Inc. and
made a dividend distribution of American Mortgage Company, Inc. to its
shareholders.
On May 16, 1996, the Company changed its name to National Scientific Corporation
and began its operations. NSC added several key individuals to its management
team, who have significant expertise in the electronic components and
semiconductor fields, as well as experience in leadership as executives of major
corporations.
NSC acquired the operations of Eden Systems as a wholly-owned subsidiary in
1996. Eden was engaged in the water reclamation business and the sale of
environmentally sensitive cleaning products. Eden's operations were sold on
September 30, 1997.
NSC is a development stage company. NSC's current business involves development
of several products in the electronics industry. We intend to provide enhanced
products and processes to the semiconductor, integrated circuit and
telecommunications industries through joint ventures, developmental agreements,
licensing and other mutually beneficial arrangements.
NSC's operating losses were $772,545 and $699,085 for the years ended September
30, 1998 and 1999, respectively and had no revenues for those years. See "Part
F/S-Financial Statements."
NSC occupies approximately 575 square feet of executive office space in Phoenix,
Arizona.
PRODUCTS
We believe our products and processes will directly affect many aspects of
quality standards in the electronics manufacturing industry. This will be
accomplished by application of our proprietary component designs. We believe our
components will simplify the manufacturing process through standardization of
the size and shape of passive components and through application of our high
speed, high efficiency transistors.
The manufacturing process for virtually all consumer, industry and governmental
electronic products will become much less complicated than it is now. There will
be less "rejects" and the products will be more compact, faster and be able to
perform many more functions than is possible using current technology and
processes. The results will be cheaper products, that do more, are more
reliable, are produced faster with fewer steps and smaller standardized
components.
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During the past three years of operations, five research and development
projects have been brought to the patent application stage. Our first patent was
awarded June 15, 1999. The initial five projects for NSC are:
On September 30, 1997, a U.S. patent application was filed by NSC for a
Hetrojunction Bipolar Transistor (HBT). On September 8, 1998, we filed the
Patent Cooperation Treaty international patent application for this device.
Bipolar transistors are used in the manufacture of digital circuits such as
cellular phones, personal computers and automotive circuitry. The demand for
faster and more efficient signal processing has been a driving force behind the
enormous prosperity of the world electronics market in the last decade. This
design of the HBT will be used to create faster devices with superior
performance in high speed digital circuits, high frequency microwave circuits
and linear applications.
U.S. Patent 5,912,481 was issued for this device on June 15, 1999.
NSC filed a U.S. patent application on October 31, 1997, for a Monolithic
Inductor. On October 27, 1998, we filed the Patent Cooperation Treaty
international patent application. The inductor is 100% compatible with current
integrated circuit manufacturing technology and requires no additional steps to
be included in the manufacturing process.
Inductors and/or coils are used in the broadest range of electronic circuits for
telecommunications applications. Since our device can be easily included within
an integrated circuit, it offers manufacturers dramatic cost reductions through
simplified design, assembly and testing. In addition, the new device will allow
for significantly increased miniaturization, a critical factor for electronics
manufacturer circuit technology.
The U.S. Patent Office issued a Notice of Allowance for this application on
September 7, 1999.
On December 17, 1997, a U.S. patent application was filed for a High Performance
N-Channel Metal-Oxide-Semiconductor (NMOS) Static Random Access Memory (SRAM).
On December 15, 1998, we filed the Patent Cooperation Treaty international
patent application for this device.
SRAM and DRAM (dynamic random access memory) memories are key and integral
components of digital computing devices such as microcomputers, workstations,
etc., which depend on an ever increasing amount of memory to improve
performance. Any improvement in chip size amounts to a considerable reduction in
cost.
We filed our fourth U.S. patent application on June 18, 1998, for a Mode
Dielectric Resonator. The Patent Cooperation Treaty international application
for this device was filed on May 26, 1999. Resonators are used in many
applications, including microwave oscillators, narrowband microwave filters,
radar detectors, speed guns, automatic door openers, cellular and portable
phones and global positioning satellites.
On July 10, 1998, we filed our fifth U.S. patent application for a Distributed
Amplifier. On June 15, 1999, the Patent Cooperation Treaty international
application for this device was filed.
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Amplifiers are used in all electronic products that require some level of power
increase such as telecommunication and microwave products, internet
communications, automotive products, biomedical products and in virtually all
automated manufacturing functions.
The U.S. Patent Office issued a Notice of Allowance on this application on
September 29, 1999.
SALES AND MARKETING
We have done extensive research regarding the major semiconductor manufacturing
companies and their products and the manufacturing processes. The results of
this research have confirmed the belief of our management and consultants that
the increased performance and efficiencies inherent in the products currently in
various stages of design and development are of interest to virtually all
sectors of the industry.
The existing markets where our enhanced products and processes have
applicability are already multi-billion dollar markets. The semiconductor
industry is an on-going process to create devices that do more, are faster and
cost less. We believe our products will aid this revolution and create profits
for NSC and increase value for its shareholders.
We believe our new technologies may become marketable products quicker by
licensing and/or partnering with on-going companies with complementary
technologies. Our goal is to identify and complete these agreements. Management
has undertaken an aggressive search for candidates and is in the process of
conducting investigations, technology evaluations and preliminary negotiations
with potential licensees/partners. No agreements have been reached with any
potential licensee or partner, except Siagri International, Inc.
INDUSTRY
Our management and consulting team is committed to thoroughly research the
specific needs of the electronic products industry. We believe the need for
increased speed in manufacturing and delivery is paramount in maintaining a
profit margin for the electronic product providers. NSC is committed to
providing the intellect, experience, drive and the technical innovations
required to address the needs of the semiconductor, integrated circuit and
telecommunication industries.
BUSINESS STRATEGY
Our mission is to develop significant enhancements for existing semiconductor,
integrated circuit and other electronic component products, processes and
markets. We intend to utilize unique, patentable technologies and provide these
enhancements to the market place through joint venture licensing agreements with
leading manufacturing firms.
We do not intend to manufacture any of our own products. We do not intend to
sell our products or processing methods, but will protect these through the
patent process, both domestically and internationally.
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NSC intends to continue research and development efforts, including simulations
and creation of working prototypes, where possible. Management has no intention
of limiting NSC to these five (5) products. Research and development will be
accomplished through our on-going association with an independent lab and test
facilities at a major Arizona university.
MARKETING METHODS
In August 1999, we hired a marketing consultant to execute our sales and
marketing programs. This individual is an applications engineer who is familiar
with both our existing products and potential licensing customers.
CUSTOMERS
NSC has a binding letter of intent with Siagri International, Inc. for the
development of a specific frequency of our Distributed Amplifier. It will be
used as a component in their microwave generator devices. We will receive
royalties equal to 5% of our amplifier's contribution to the generator "gross
sale price".
To expedite the project, Siagri has contracted with our lead technical
consultant, Dr. El-Sharawy, to design and build a prototype amplifier for use in
their devices.
Dr. Richard Besserman, MD, the CEO of Siagri, has disclosed Siagri's activity is
in testing the effectiveness of electromagnetic treatment in human medicine,
veterinary medicine, food safety and agriculture. Siagri will conduct
experiments at two major universities to determine the effects of controlled
microwave energy on disease causing bacteria and viruses.
We have not realized any revenues from our existing products and processes.
PATENTS
Please refer to the PRODUCTS section of this report for specific information on
the status of NSC's existing patents and applications.
We endeavor to protect our intellectual property rights through our patents and
patents pending; however, we can't be sure that NSC will be able to protect its
technology adequately or that competitors will not develop similar technology.
We can't be sure that any patent applications NSC has filed or will file will be
issued or that foreign intellectual property laws will protect NSC's
intellectual property rights. Other companies and inventors may receive patents
that contain claims applicable to our products and processes. The use of NSC's
products and processes covered by such patents could require licenses that may
not be available on acceptable terms, if at all. In addition, we can't be sure
that patent applications will result in issued patents.
Although there are no pending claims or lawsuits against NSC regarding possible
infringement claims, we can't be sure that infringement claims by third parties,
or claims for indemnification resulting from infringement claims, will not be
asserted in the future. Any such assertions, if proven to be true, may
materially adversely affect NSC's business, financial condition and results of
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operations. In the future, we may be forced to litigate to enforce our patents,
to protect our trade secrets or know-how owned by us or to defend NSC against
claimed infringement of the rights of others and to determine the scope and
validity of the proprietary rights of others. Any such litigation could result
in substantial cost and diversion of resources by NSC, which could have a
material adverse effect on our financial condition and results of operations.
Adverse determinations in such litigation could result in our loss of
proprietary rights, subject NSC to significant liabilities to third parties,
require us to seek licenses from third parties or prevent us from selling or
licensing our products and/or processes. This could have a material adverse
effect on NSC's financial condition and results of operations. In addition, we
can't be sure that a license under a third party's intellectual property rights
will be available on reasonable terms, if at all. See "FACTORS AFFECTING
OPERATING RESULTS-PATENTS, LICENSES AND INTELLECTUAL PROPERTY CLAIMS."
COMPETITION
Our competitors are well established and have significantly greater resources
than us. Although we believe that our products and processes are proprietary and
protected by patents and/or patents pending, we can't be sure that we can
compete successfully in the semiconductor and electronics markets. See
"PATENTS-FACTORS AFFECTING OPERATING RESULTS."
RESEARCH AND DEVELOPMENT
NSC has conducted several simulations and/or developed working prototypes of its
products and processes that have yielded results that we feel separate our
products from those currently in the marketplace. We can't be sure that our test
results will prove successful in the actual marketplace or that we will be able
to develop additional new products or processes.
As of September 30, 1999, we have two part-time technical consultants engaged in
research and development. We also use the services of an independent lab and
test facilities at a major university under the direction of our technical
consultants. Expenditures for research and development for the years ending
September 30, 1998 and 1999 totaled $321,067 and $130,463, respectively.
EMPLOYEES
We have a total of five (5) on staff, three (3) full-time and two (2) part-time.
We believe all relations are good.
FACTORS AFFECTING OPERATING RESULTS
This Registration Statement contains forward-looking statements that involve
risk and uncertainties. The statements contained in this Registration Statement
that are not purely historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, without limitation, statements regarding NSC's
expectations, beliefs, intentions or strategies regarding the future and NSC
intends that such forward-looking statements be subject to safe harbors created
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thereby. Wherever possible, we have identified these forward-looking statements
by words such as "believes," "anticipates," "expects" or "intends" and similar
language.
All forward-looking statements included in this document are based on
information available to us on the date of this document and NSC assumes no
obligation to update any such forward-looking statements. Our actual results may
differ materially as a result of certain factors, including those set forth
hereafter and elsewhere in this Registration Statement. Potential investors
should consider carefully the following factors, as well as the more detailed
information contained elsewhere in this Registration Statement, before making a
decision to invest in the common stock of NSC.
LIMITED OPERATING HISTORY; ACCUMULATED DEFICIT; NEED FOR ADDITIONAL CAPITAL
There is limited historical financial information about NSC upon which to base
an evaluation of our performance or to make a decision regarding an investment
in shares of its common stock. NSC has a shareholders' deficit of $72,922
through September 30, 1999 and expects to incur a loss for the first six months
of 1999/00. Cash and equivalents balance at September 30, 1999 was $62,185 and
our use of cash in operations was $327,000 for the year ended September 30,
1999.
We commenced marketing efforts in August 1999, but we don't know if our products
and processes will achieve significant levels of marketing acceptance. Our
business is subject to all of the problems, expenses, delays and risks inherent
in the establishment of a new business enterprise including limited capital
resources, possible delays in product development, uncertain market acceptance
and the absence of operating history. Therefore, we aren't sure that our
business or products/processes will be successful or that we will be able to
achieve or maintain profitable operations. We may encounter unforeseen
difficulties that may deplete our capital resources more rapidly than
anticipated.
We will likely be required to make significant investments in research and
development and spend additional money to maintain and expand our marketing
efforts. We may seek additional equity financing to provide the necessary
capital for these efforts. The timing and amount of any capital requirements can
not be predicted at this time. We can't be sure that any financing will be
available on acceptable terms, if at all. If such financing is not available on
satisfactory terms, we may be unable to continue, develop or expand our
business, develop new products or penetrate existing markets at the rate desired
and our operating results may be adversely affected. Equity financing could
result in additional dilution to existing shareholders. See "LIQUIDITY AND
CAPITAL RESOURCES."
MARKET RISKS OF A NEW BUSINESS
We have formulated our business plans and strategies based on certain
assumptions regarding the timely marketability of our products and processes to
potential licensing partners. These assumptions are based on the best estimates
of NSC's management. Our assessments regarding potential licensing partners may
be incorrect. Any future success of NSC may depend upon factors including
changes in the direction of technologies we are involved in, governmental
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regulation, increased levels of competition within the technology fields we are
attempting to penetrate, licensing agreements offered by competing technologies,
changes in general economic conditions, increases in operating costs including
costs of consultants, lab and testing facility fees, supplies and equipment.
RELIANCE ON LIMITED NUMBER OF PRODUCTS
All of our products are based on applications in the electronics industry.
Although the applications vary from product to product, a decline in the market
demand for our products as well as the products of other companies utilizing our
products could have a significant adverse impact on NSC.
DEPENDENCE ON MARKETING EFFORTS
We are dependent on our ability to market our products to manufacturers that can
use our technologies to their benefit. We must increase the level of awareness
of our products to firms that spend considerably more money than we do on their
own on-going research and development. We will be required to devote substantial
management and financial resources to our marketing efforts and we don't know if
these efforts will be successful.
DEPENDENCE ON KEY EMPLOYEES
We believe that our success will depend to a significant extent upon the efforts
and abilities of a small group of executive, technical and marketing personnel
and in particular on Lou Ross, Chairman and CEO, Drs. El-Sharawy and Hashemi,
technical consultants for NSC. The loss of the services of one or more of these
key personnel could have a material adverse effect on our business, financial
condition and results of operations. In addition, our future success will depend
on our ability to continue to attract and retain qualified technical and
management personnel.
PATENTS, LICENSES AND INTELLECTUAL PROPERTY CLAIMS
Our success depends, in part, on our ability to obtain patents, licenses and
other intellectual property rights for our products and technology. We have two
provisional U.S. patent applications pending, one U.S. patent issued June 15,
1999 (5,912,481), one Notice of Allowance issued September 7, 1999, another
Notice of Allowance issued September 29, 1999 and five Patent Cooperation Treaty
international patent applications filed. The process of seeking patent
protection is long and expensive and we can't be sure that patents will be
issued, that we will be able to adequately protect our technology or that
competition will not be able to develop similar technology. We believe the basis
on which we filed our currently pending patent applications is reasonable;
however, we can't be sure that any patent applications filed will result in
issued patents or that we will be able to pursue each particular patent
application claim to issuance.
There are no pending claims or lawsuits against NSC regarding possible
infringement claims. Although we don't believe that we have infringed on any
patented technology, any successful infringement claim would materially
adversely affect our business, financial condition and results of operations. In
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the future, litigation may be necessary to enforce patents issued to us, to
protect trade secrets or know-how owned by us or to defend us against claimed
infringement of the rights of others and to determine the scope and validity of
the proprietary rights of others.
Any litigation could result in substantial cost and diversion of effort by us,
which could have a material adverse effect on our financial condition and
operating results. Adverse determinations in any litigation could result in
NSC's loss of proprietary rights, subject us to significant liabilities to third
parties, require us to seek licenses from third parties or prevent us from
marketing our products, any of which could have a material adverse effect on our
financial condition and results of operations. We don't know if a license under
a third party's intellectual property rights will be available to us on
reasonable terms, if at all.
YEAR 2000
Many currently installed computer systems and software products are coded to
accept only two-digit entries in the date field. Beginning in the year 2000,
these date code fields will need to accept four digits entries in order to
distinguish 21st century dates. We are not aware of any situation of
noncompliance that would materially adversely effect our operations or financial
condition. We can't be sure, however, that instances of noncompliance which
could have a material adverse effect on our operations or financial condition
have not been identified. Additionally, we can't be sure that the systems of
other companies with which we transact business will be corrected on a timely
basis, or that failure by such third party entities to correct a Year 2000
problem, or a correction which is incompatible with our information systems,
would not have a material adverse effect on our operations or financial
condition.
THIN MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
NSC's common stock has been traded on the OTC Electronic Bulletin Board since
December 1996 under the symbol "NSCT". We believe that factors such as
announcements of developments related to our business, fluctuations in our
quarterly or annual operating results, failure to meet securities analysts'
expectations, general conditions in the marketplace and the worldwide economy,
announcements of technological innovations or enhancements by us or our
competitors, developments in patents or other intellectual property rights and
developments in our relationships with clients and suppliers could cause the
price of our common stock to fluctuate, perhaps substantially. In recent years,
the stock market has experienced extreme price fluctuations, which have often
been unrelated to the operating performance of affected companies. These
fluctuations could adversely affect the market price of NSC's common stock.
SHARES ELEGIBLE FOR SALE
Sales of substantial numbers of shares of common stock in the public market
could adversely affect the market price of our common stock. Of the 36,544,289
shares outstanding as of September 30, 1999, (i) approximately 6,983,524 shares
are eligible for resale in the public markets subject to compliance with Rule
144 ("Rule l44") promulgated under the Securities Act of 1933, as amended (the
"1933 Act") and (ii) approximately 579,000 shares are eligible for immediate
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sale in the public market as unrestricted shares or pursuant to Rule 144(k) of
the 1933 Act. In addition, approximately 10,050,000 shares subject to warrants
(if exercised) would be eligible for sale in the public market one year from
date of issue pursuant to Rule 144.
In general, under Rule 144 as currently in effect, any person (or persons whose
shares are aggregated for purposes of Rule 144) who beneficially owns restricted
securities with respect to which at least one year has elapsed since the later
of the date the shares were acquired from NSC or from an affiliate of NSC, is
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares of common stock of NSC,
or, if the common stock is quoted on a stock exchange, the average weekly
trading volume in common stock during the four calendar weeks preceding such
sale.
Sales under Rule 144 also are subject to certain manner-of-sale provisions and
notice requirements and to the availability of current public information about
NSC. A person who is not an affiliate, who has not been an affiliate within
three month prior to sale and who beneficially owns restricted securities with
respect to which at least two years have elapsed since the later of the date the
shares were acquired from NSC or from an affiliate of NSC, is entitled to sell
such shares under Rule 144(k) without regard to any of the volume limitations or
other requirements described above.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Since we changed our name to National Scientific Corporation and the
commencement of current operations in May 1996, we have been engaged in
extensive research and development activities. Our activities have resulted in
the issuance of one (1) U.S. Patent, two (2) Notices of Allowance and two (2)
U.S. Patent applications pending. Our current activities include:
* Research, including clinical trials;
* Product development;
* Development of markets and distribution channels;
* Negotiation of strategic alliances;
* Patent applications;
* Raising capital;
* Development of corporate infrastructure and
* Initial operations (beginning in May 1996).
For a complete understanding of these activities, this Management's Discussion
and Analysis should be read in conjunction with Part I. Item 1 Description of
Business and Part F/S-Financial Statements to this Form 10-SB.
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RESULTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1998 AND 1999
No revenue was generated for the years ending September 30, 1998 and 1999.
Research and development expenditures decreased from $321,067 for the year ended
September 30, 1998, to $130,463 for the current year ended of September 30,
1999. A significant portion of research and development costs are incurred in
bringing products to the patent application stage. All five (5) of our patent
applications were filed in our fiscal 1998 year.
Costs and expenses declined from $741,401 to $691,827 for the years ended
September 30, 1998 and 1999, respectively. We issued stock for a significant
portion of our research and capital formation costs, approximately $370,000 in
fiscal 1998 and $350,000 in fiscal 1999, in order to conserve cash during both
years.
The interest expense for the most recent year end resulted from an accrual for a
note payable in the amount of $110,000, which is due in December 2000.
LIQUIDITY AND CAPITAL RESOURCES
We have not been profitable and have had negative cash flow from our operations
due to our substantial on-going investment in research and development efforts
and expenditures to build the appropriate infrastructure to support growth.
Consequently, we have been dependent on private placements of our equity
securities to fund our cash requirements.
NSC's private placement of March 15, 1998 was closed in July 1999, resulting in
the issuance of 9,650,000 shares of common stock (after conversion) for net
proceeds of approximately $482,500. In connection with the private placement,
NSC issued warrants to purchase an aggregate of 9,650,000 shares of common stock
(the "Warrants"). The exercise price of the Warrants, which became exercisable
in March 1998 and expire in December 2000, is $1.00 per share. We have not
issued any shares of common stock from the exercise of the Warrants.
NSC's most recent private placement began in August 1999 and has resulted in the
issuance of 320,000 shares of common stock for net proceeds of approximately
$80,000 through September 30, 1999. In connection with this private placement,
NSC issued warrants to purchase an aggregate of 400,000 shares of common stock
(the "Warrants"). The exercise price of the Warrants, which became exercisable
in August 1999 and expire in December 2001, is $1.50 per share. Currently, we
have not issued any shares of common stock from the exercise of the Warrants.
The total private offering, including amendments dated October 18, 1999 and
November 10, 1999, is for 4,085,000 shares of common stock, plus another
4,150,000 shares of common stock available by exercising the Warrants.
During the fiscal years ending September 30, 1998 and 1999, we issued 3,487,557
and 3,165,000 shares, respectively, of our common stock to consultants in lieu
of cash compensation. Also, during 1997-98 and 1998-99 fiscal years, we granted
334,000 and 270,000 options, respectively, to our consultants to purchase shares
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of NSC's common stock. Since the common stock shares available under these
options are restricted under Rule 144, the options were issued at less than fair
market value. As of September 30, 1998, 16,000 of the options have been
exercised and the stock has been issued. As of September 30, 1999, 496,000
options have been exercised and the stock has been issued. As of September 30,
1999, 7,000 of the 1997-98 options remain open with no expiration date; 85,000
of the 1998-99 options remain open with 85,000 expiring December 31, 1999.
Since inception, NSC has used its common stock and stock options to attract,
retain and compensate its employees and consultants and as collateral for debt
financing. It is our intent to limit the use of our common stock as compensation
in the future with the following exception. The Board of Directors has currently
authorized management to issue a maximum of 600,000 shares of common stock to
compensate employees and/or consultants for raising $300,000 under its current
private offering that began in August 1999. As of September 30, 1999, none of
the 600,000 shares have become due or payable, although a $15,000 liability has
been recorded at year end.
As of September 30, 1999, our cash reserves totaled $62,185 and total current
assets were $62,185. We have recently begun product marketing efforts after
several years of research and development and have not yet reached break-even in
terms of both cash flow and profitability. We completed our current private
offering on December 30, 1999. With completion of this private offering, NSC, at
its current operating rate, believes it will have sufficient cash reserves to
operate through September 30, 2000. In addition, our long term debt as of
September 30, 1999 was $110,000, plus accrued interest from December 31, 1998 at
ten percent (10%) per year. This long term debt relates to a note due and
payable on or before December 31, 2000 and is secured by 500,000 shares of our
common stock held in trust.
ITEM 3. DESCRIPTION OF PROPERTY
We currently lease 575 square feet of office space at 4455 E. Camelback Road,
Suite E160, Phoenix, Arizona through a lease expiring September 30, 2001 with
annual lease payments of $27,600.
We believe that our facilities are adequate for our needs through 2000.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists certain information as of September 30, 1999 (the
"Reference Date") with respect to the beneficial ownership of common stock of
NSC, by each person known by NSC to own beneficially more than five percent of
NSC's common stock, by each executive officer and director and by all officers
and directors as a group. Unless otherwise indicated, all persons have sole
voting and investment powers over such shares, subject to community property
laws. As of the Reference Date, there were 36,544,289 shares of common stock
outstanding.
NAME AND ADDRESS AMOUNT AND NATURE
OF BENEFICIAL OWNER (1) OF BENEFICIAL OWNER (2) PERCENT OF CLASS
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L. Ross, Chairman of the Board, 2,996,440 (3) 8.20%
President, Director
Vernon M. Traylor, Corporate 1,750,000 4.79%
Secretary
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(1) Except as otherwise noted, the address for each person is c/o National
Scientific Corporation, 4455 E. Camelback Road, Suite E160, Phoenix,
Arizona 85018.
(2) Unless otherwise noted, NSC believes that all persons named in the table
have sole voting and investment power with respect to all shares of common
stock listed as beneficially owned by them. A person is deemed to be the
beneficial holder of securities that can be acquired by such person within
60 days from the Reference Date upon the exercise of warrants or options.
Each beneficial owner's percentage ownership is determined by including
shares, underlying options of warrants which are exercisable by such person
currently, or within 60 days following the Reference Date and excluding
shares underlying options and warrants held by any other person.
(3) Includes 1,670,000 shares owned by family members.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors, executive officers, significant employees and consultants of NSC,
their respective ages and positions with NSC are as follows:
NAME AGE POSITION
---- --- --------
L. Ross 71 President & CEO, Chairman of the Board,
Director
Vernon M. Traylor 51 Corporate Secretary
Wendy S. Burton 37 Director of Corporate Communications
Dr. El-Badawy El-Sharawy 41 Chief Technical Consultant
Dr. Maid Hashemi 38 Technical Consultant
12
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT ADVISORS
L. L. ROSS. Mr. Ross has served as Chairman of the Board and Director since 1996
and assumed President & CEO duties in March 1998. Mr. Ross served as Chairman &
CEO of Intel Malaysia from 1970 to 1975. From 1976 to 1996, Mr. Ross served in a
technical consulting capacity for various electronics manufacturing firms,
including Labelab and Advanced Semiconductor Engineering.
VERNON M. TRAYLOR. Mr. Traylor joined NSC in March 1998 as Corporate Secretary.
Prior to that, Mr. Traylor served as Vice-President/Treasurer and Director of
Road Machinery Co. from 1970 to 1992. From 1992 to joining NSC, Mr. Traylor
served in a financial consulting capacity with Valuation and Business Services
for various mid-size private and public firms in the Phoenix area.
WENDY S. BURTON. Ms. Burton joined NSC in May 1998 as Director of Corporate
Communications. From 1992 to 1998, Ms. Burton was in the investors relations
field with various companies with duties ranging from initial public offerings,
private placements and seed capital ventures.
EL-BADAWY EL-SHARAWY, Ph.D. Dr. El-Sharawy has been with NSC since its inception
in 1996 as its Chief Technical Advisor. He has been an Assistant Professor of
Electrical Engineering since 1989 at a major Arizona university. His expertise
includes, but is not limited to: microwave circuits, anistropic devices and
applied electromagnetics. He is a senior member of IEEE and is a recipient of
the 1980 Egyptian Engineering Syndicate Medal of Honor.
MAJID M. HASHEMI, Ph.D. Dr. Hashemi has been a Technical Advisor to NSC since
its inception in 1996. He is currently the principal design engineer for a major
international semiconductor firm located in Silicon Valley and has been since
1995. Prior to that, he was with Motorola from 1993 to 1995.
BOARD OF DIRECTORS
The Board of Directors consisted of three members until February 1998, at which
time Marc Messina and Michelle Neild resigned. L. L. Ross has been the sole
Director and Chairman of the Board of NSC since February 1998.
DIRECTOR COMPENSATION
NSC has not adopted any compensation plan for Directors.
13
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION
The following table lists the total compensation for the Chief Executive Officer
and Corporate Secretary, whose total salary and non-cash compensation exceeded
$100,000 for fiscal 1997, 1998 and 1999.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
NAME AND ------------------------------- OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
------------------ ---- ------ ----- ------------
L.L. Ross 1999 $14,600 $ -0- $ -0-
Chairman of the Board, 1998 $ 2,500 $ -0- $ -0-
CEO and President 1997 $ -0- $ -0- $2,612,500(1)
Vernon M. Traylor 1999 $68,700 $ -0- $ 240,000(1)
Corporate Secretary 1998 $22,500 $ -0- $ 55,000(1)
- ----------
(1) Stock in lieu of cash compensation
STOCK OPTION PLANS FOR EXECUTIVES
There are no stock option plans for executives in place as of the date of this
report.
COMPENSATION/EMPLOYMENT AGREEMENTS
There are no compensation or employment agreements in place for executives with
the exception of the following. Lou Ross will receive the following
compensation: (1) Four percent (4%) of all future gross revenues generated from
NSC's products and/or intellectual property will be paid as compensation and (2)
Effective September 1, 1999, Mr. Ross will receive $7,000 per month, subject to
cash availability.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Lou Ross' family members provided unrestricted common stock of NSC as part
of NSC's private offering in August 1999. In exchange for doing so, Mr. Ross
received the two (2) compensation provisions outlined in COMPENSATION/EMPLOYMENT
AGREEMENTS that can be reviewed in ITEM 6. In addition, Mr. Ross received 1.88
shares of NSC common restricted stock for each share of his family's free
trading stock.
14
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
The following summary is a description of certain provisions of NSC's
Certificate of Incorporation and Bylaws. This summary does not purport to be
complete and is subject to, and is qualified in its entirety by, all of the
provisions of the Certificate of Incorporation and Bylaws, including the
definitions therein of certain terms. Copies of the Certificate of Incorporation
and Bylaws are filed as an exhibit to the Registration Statement.
COMMON STOCK
In accordance with NSC's Certificate of Incorporation, the Board of Directors
has authority to issue up to 80,000,000 shares of common stock, par value $0.01
per share. As of September 30, 1999, there were 36,544,289 shares of common
stock outstanding and 401 holders of record of common stock. Each holder of
common stock is entitled to one vote for each share held on all matters.
Cumulative voting in elections of directors and all other matters brought before
stockholder meetings is not provided for under NSC's Certificate of
Incorporation or Bylaws.
The holders of common stock will be entitled to receive such dividends, if any,
as may be declared by the board from time to time out of legally available
funds, subject to any preferential dividend rights of any outstanding shares of
Preferred Stock. Upon the liquidation, dissolution or winding up of NSC, the
holders of common stock will be entitled to share ratably in all assets of NSC
that are legally available for distribution, after payment of all debt and other
liabilities and distribution in full of preferential amounts, if any, to be
distributed to holders of Preferred Stock.
The holders of common stock are not entitled to preemptive, subscription,
redemption or conversion rights. The rights, preferences and privileges of
holders of common stock are subject to, and may be adversely affected by, the
rights of any series of Preferred Stock which NSC may designate and issue in the
future.
PREFERRED STOCK
In accordance with NSC's Certificate of Incorporation, the Board of Directors
has the authority, without further action by the stockholders, to issue up to
4,000,000 shares of $0.10 par value Preferred Stock in one or more series and to
fix the designations, powers, preferences and relative participating, optional
or special rights and the qualifications, limitations or restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of redemption
and liquidation preferences, any or all of which may be greater than the rights
of the common stock.
The Board of Directors, without stockholder approval, can issue Preferred Stock
with voting, conversion or other rights that could adversely affect the voting
power and other rights of the holders of common stock. Preferred Stock could
thus be issued quickly with terms calculated to delay or prevent a change in
control of NSC or make removal of management more difficult. Additionally, the
issuance of Preferred Stock may have the effect of decreasing the market price
of the common stock and may adversely affect the voting and other rights of the
holders of common stock. Currently, there are no issued and outstanding shares
of Preferred stock.
15
<PAGE>
TRANSFER AGENT AND REGISTRAR
Corporate Stock Transfer has been appointed as the transfer agent and registrar
for NSC's common stock. They are located at 3200 Cherry Creek Drive South, #430,
Denver, CO 80209.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE ARTICLES OF INCORPORATION AND BYLAWS
There are no Anti-Takeover provisions in the Articles of Incorporation or Bylaws
of NSC.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The principal United States market for NSC's common stock is the OTC Bulletin
Board. The following is the high and low bid information for our common stock:
COMMON STOCK HIGH LOW
---- ---
1999
First Quarter (through March 31, 1999) $ 0.34 $ 0.10
Second Quarter (through June 30, 1999) $ 0.26 $0.125
Third Quarter (through September 30, 1999) $ 0.28 $ 0.16
1998
First Quarter (through March 31, 1998) $0.3125 $ 0.06
Second Quarter (through June 30, 1998) $ 0.36 $ 0.08
Third Quarter (through September 30, 1998) $ 0.20 $ 0.08
Fourth Quarter (through December 31, 1998) $ 0.24 $ 0.10
1997
First Quarter (through March 31, 1997) $1.5625 $ 1.00
Second Quarter (through June 30, 1997) $1.1875 $ 0.50
Third Quarter (through September 30, 1997) $0.6875 $ 0.27
Fourth Quarter (through December 31, 1997) $ 0.625 $ 0.24
There are approximately 401 holders of record of NSC's common stock as of
September 30, 1999.
SHARES ELIGIBLE FOR SALE
Sales of substantial numbers of shares of common stock in the public market
could adversely affect the market price of NSC's common stock. Of the 36,544,289
shares outstanding as of September 30, 1999, (i) approximately 6,983,524 shares
are eligible for resale in the public markets subject to compliance with Rule
144 ("Rule 144") promulgated under the Securities Act of 1933, as amended (the
"1933 Act") and (ii) approximately 579,000 shares are eligible for immediate
sale in the public market as unrestricted shares or pursuant to Rule 144(k) of
the 1933 Act. In addition, approximately 10,050,000 shares subject to warrants
16
<PAGE>
(if exercised) would be eligible for sale in the public market one year from
date of issue pursuant to Rule 144.
In general, under Rule 144 as currently in effect, any person (or persons whose
shares are aggregated for purposes of Rule 144) who beneficially owns restricted
securities with respect to which at least one year has elapsed since the later
of the date the shares were acquired from NSC or from an affiliate of NSC, is
entitled to sell within any three-month period a number of shares that does not
exceed the greater of 1% of the then outstanding shares of common stock of NSC,
or, if the common stock is quoted on a stock exchange, the average weekly
trading volume in common stock during the four calendar weeks preceding such
sale.
Sales under Rule 144 also are subject to certain manner-of-sale provisions and
notice required and to the availability of current public information about NSC.
A person who is not an affiliate, who has not been an affiliate within three
months prior to sale and who beneficially owns restricted securities with
respect to which at least two years have elapsed since the later of the date the
shares were acquired from NSC or from an affiliate of NSC, is entitled to sell
such shares under Rule 144(k) without regard to any of the volume limitations or
other requirements described above.
DIVIDENDS
NSC has not paid, nor declared, any dividends since its inception and does not
intend to declare any such dividends in the foreseeable future.
ITEM 2. LEGAL PROCEEDINGS
NSC is not involved in any pending legal proceedings to which we are a party or
of which any of our property is subject.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There were no disagreements between NSC and Hurley & Company on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedures, which disagreements, if not resolved to the satisfaction of
Hurley & Company, would have caused it to make reference to the subject matter
of the disagreements in connection with its report.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
During the period January 15, 1997, through September 30, 1997, NSC sold 885,447
shares of common stock for total consideration of $820,117 to accredited
investors as defined by Rule 501(a) of Regulation D. The shares were sold in
reliance on the exemption provided by Sections 4(2) and 4(6) of the Securities
Act of 1933 and Rule 506 of Regulation D.
During the period March 15, 1998 through July 31, 1999, NSC sold 9,650,000
shares of common stock (after conversion) for total consideration of $482,500 to
accredited investors as defined by Rule 501(a) of Regulation D. The shares were
sold in reliance on the exemption provided by Sections 4(2) and 4(6) of the
Securities Act of 1933 and Rule 506 of Regulation D.
17
<PAGE>
During the period August 1, 1999, through September 30, 1999, NSC sold 320,000
shares of common stock (after conversion) for total consideration of $80,000 to
accredited investors as defined by Rule 501(a) of Regulation D. Since September
30, 1999, we have sold an additional 3,690,000 shares of common stock for total
consideration of $720,000 to accredited investors as defined by Rule 501(a) of
Regulation D. The shares were sold in reliance on the exemption provided by
Sections 4(2) and 4(6) of the Securities Act of 1933 and Rule 506 of Regulation
D.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
There are no provisions for indemnification of directors and officers in NSC's
Bylaws or Articles of Incorporation.
18
<PAGE>
PART F/S
NATIONAL SCIENTIFIC CORPORATION
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants F-2
Consolidated Balance Sheets as of September 30, 1998 and 1999 F-3
Consolidated Statement of Operations for the years ended
September 30, 1998 and 1999 F-4
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended September 30, 1998 and 1999 F-5
Consolidated Statements of Cash Flow for the years ended
September 30, 1998 and 1999 F-7
Notes to Consolidated Financial Statements F-9
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors
National Scientific Corporation
We have audited the accompanying balance sheets of National Scientific
Corporation (a development stage Company) as of September 30, 1999 and 1998 and
the related statements of operations, shareholders' equity (deficit) and cash
flows for each of the two years in the period ended September 30, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of National Scientific Corporation at September
30, 1999 and 1998 and the results of operations and cash flows for each of the
two years in the period ended September 30, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company is in the development stage, has not yet
generated significant revenues and is dependent upon raising capital from
investors. As discussed in note 2, the Company was able to raise a significant
amount of cash from the sale of stock subsequent to year end, however, there is
no assurance that the funds will be sufficient to meet the Company's working
capital requirements until the Company's products are accepted by the
marketplace.
/s/ Hurley & Company
Granada Hills, CA
December 7, 1999
F-2
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
BALANCE SHEETS
September 30, 1999 and 1998
ASSETS
1999 1998
----------- ----------
Current Assets:
Cash and Cash Equivalents $ 62,185 $ 21,735
Due From Sale of Subsidiary -- 12,500
----------- ----------
Total Current Assets 62,185 34,235
----------- ----------
Property and Equipment, net 3,340 4,676
----------- ----------
Total Assets $ 65,525 $ 38,911
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts Payable and Accrued Expenses $ 19,917 $ 17,827
Accrued Interest 8,530 --
----------- ----------
Total Current Liabilities 28,447 17,827
----------- ----------
Long Term Note Payable 110,000 110,000
----------- ----------
Commitments, Contingencies and Subsequent
Events (See Notes)
Shareholders' Equity (Deficit):
Preferred Stock, $.10 par value; 4,000,000
Shares Authorized 15,000 Shares Issued and
Outstanding at September 30, 1998 -- 1,500
Common Stock, par value $.01; 80,000,000
Shares Authorized, 36,544,289 and 25,331,849
Shares Issued and Outstanding at September 30, 1999
and 1998, Respectively 365,443 253,318
Additional Paid-in-Capital 3,432,945 2,823,491
Deficit Accumulated During the Development Stage (1,471,630) (772,545)
Accumulated Deficit (2,394,680) (2,394,680)
Receivable for Return of Stock (5,000) --
----------- ----------
Total Shareholders' Equity (72,922) (88,916)
----------- ----------
Total Liabilities and Shareholders' Equity $ 65,525 $ 38,911
=========== ==========
See accompanying notes to financial statements
F-3
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Years Ended September 30, 1999 and 1998
1999 1998
--------- --------
Revenues $ -- $ --
--------- ---------
Costs and Expenses
Consulting Fees, Related Party 455,050 75,725
Salaries and Benefits -- 73,706
Research and Development 130,463 321,067
Stock Compensation 40,916 64,040
Other 65,398 206,863
--------- ---------
Total Costs and Expenses $ 691,827 $ 741,401
--------- ---------
Net Loss From Operations (691,827) (741,401)
--------- ---------
Other Income (Expense)
Interest and Other Income 1,280 --
Interest Expense (8,538) (2,589)
Loss on Disposal of Assets -- (28,555)
--------- ---------
(7,258) (31,144)
--------- ---------
Net Loss Before Income Tax Benefit (699,085) (772,545)
Provision for Income Taxes (Benefit) -- --
--------- ---------
Net Loss $(699,085) (772,545)
========= =========
Net Loss Per Common Share, Basic and Diluted $ (0.02) $ (0.04)
========= =========
See accompanying notes to financial statements
F-4
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Years Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------- ------------------ Additional Development
Number of Number of Paid-In Accumulated Stage
Shares Amount Shares Amount Capital Deficit Deficit Total
------ ------ ------ ------ ------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance September 30, 1997 17,847,292 $178,473 -- -- 2,160,780 (2,394,680) -- (55,427)
Stock issued for services 3,487,557 34,875 -- -- 335,473 -- -- 370,348
Private placement of
preferred stock -- -- 49,500 4,950 242,550 -- -- 247,500
Exercise of warrants and
options 547,000 5,470 -- -- 100,888 -- -- 106,358
Conversion of preferred
to common stock 3,450,000 34,500 (34,500) (3,450) (31,050) -- -- --
Contributed capital -- -- -- -- 14,850 -- -- 14,850
Net loss -- -- -- -- -- -- (772,545) (772,545)
---------- ------- ------ ----- --------- ---------- -------- --------
Balance, September 30, 1998 25,331,849 253,318 15,000 1,500 2,823,491 (2,394,680) (772,545) (88,916)
========== ======= ====== ===== ========= ========== ======== ========
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT), CONTINUED
For the Years Ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------------- ------------------ Additional Development
Number of Number of Paid-In Accumulated Stage
Shares Amount Shares Amount Capital Deficit Deficit Total
------ ------ ------ ------ ------- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1998 25,331,849 253,318 15,000 1,500 2,823,491 (2,394,680) (772,545) 683,629
Stock issued for services 3,165,000 31,650 -- -- 315,979 -- -- 347,629
Preferred stock offering -- -- 47,000 4,700 230,300 -- -- 235,000
Exercise of warrants and
options 496,000 4,960 -- -- 27,490 -- -- 32,450
Private placement of
common stock 400,000 4,000 -- -- 96,000 -- -- 100,000
Conversion of preferred to
common stock 6,200,000 62,000 (62,000) (6,200) (55,800) -- -- --
Common stock issued to
collateralize loan 500,000 5,000 -- -- -- -- -- 5,000
Stock converted by
director's family
member 451,440 4,515 -- -- (4,515) -- -- --
Net loss -- -- -- -- -- -- (699,085) (699,085)
---------- -------- ------- ------ ---------- ---------- ---------- --------
Balance, September 30, 1999 36,544,289 $365,443 -- -- 3,432,945 (2,394,680) (1,471,630) (67,922)
========== ======== ======= ====== ========== ========== ========== ========
Receivable for return
of stock (5,000)
--------
(72,922)
========
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Years Ended September 30, 1999 and 1998
1999 1998
--------- --------
Cash flows from operating activities:
Net loss $(699,085) $(772,545)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 1,336 6,891
Loss on disposal of assets -- 28,555
Stock issued for services 347,629 370,348
Decrease in receivables 12,500 17,500
Decrease in prepaid expenses and deposits -- 10,571
Increase (decrease) in accounts payable
and accrued expenses 2,090 (4,752)
Increase in accrued interest 8,530 --
--------- ---------
Net cash used in operating activities (327,000) (343,432)
--------- ---------
Cash flows from investing activities:
Proceeds from the sale of furniture and equipment -- 4,660
--------- ---------
Cash flows from financing activities:
Repayment of shareholder loans -- (10,000)
Repayment of capital lease obligations -- (1,819)
Proceeds from the issuance of preferred stock 235,000 247,500
Proceeds from issuance of common stock 132,450 121,208
--------- ---------
Net cash provided by financing activities 367,450 356,889
--------- ---------
Net increase in cash and cash equivalents 40,450 18,117
Cash and cash equivalents, beginning of year 21,735 3,618
--------- ---------
Cash and cash equivalents, end of year $ 62,185 $ 21,735
========= =========
See accompanying notes to financial statements
F-7
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended September 30, 1999 and 1998
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
1999 1998
------ ------
Cash paid during the year for interest $ 8 $2,589
====== ======
Cash paid during the year for income taxes $ -- $ --
====== ======
SUMMARY OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During 1999, the Company issued 451,440 shares of restricted common stock
to a Director's family member in exchange for 320,000 shares of
unrestricted common stock.
During 1998, the Company sold equipment for $4,660 in cash, with the
purchaser assuming $9,252 in lease obligations.
See accompanying notes to financial statements
F-8
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1999 and 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies followed
by National Scientific Corporation (The Company or NSC). The policies
conform with generally accepted accounting principles, which require
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
a. OPERATIONS
The Company was incorporated in Texas on June 22, 1953 as American
Mortgage Co. On May 16, 1996, the Company changed its name to National
Scientific Corporation (NSC). During 1996, the Company acquired the
operations of Eden Systems, Inc. as a wholly-owned subsidiary. Eden
was engaged in water treatment and the retailing of cleaning products.
Eden's operations were sold on September 30, 1997. As such, management
now considers NSC to be in the development stage. Since September 30,
1997, the Company has engaged its efforts in the research and
development of semiconductor proprietary technology and processes and
in raising capital to fund its operations and research.
b. CASH EQUIVALENTS
Cash equivalents include money market accounts and other short-term
investments with an original maturity of three months or less.
c. PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and are being depreciated
over estimated useful lives of five years using the straight-line
method.
d. ADVERTISING AND MARKETING COSTS
Advertising and marketing costs, which totaled $3,476 in 1999 and
$29,639 in 1998 are expensed as incurred.
e. STOCK OPTIONS
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its employee stock options. Under
APB 25, no compensation expense is recorded when the exercise price of
the option equals the market price of the underlying stock on the date
of the grant. The Company has adopted the disclosure only provisions
of Statement of Financial Accounting Standards No. 123, "Accounting
for Stock Based Compensation".
F-9
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
September 30, 1999 and 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
f. INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amount of existing assets and liabilities and their
respective tax bases, including operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect in deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized.
g. RESEARCH AND DEVELOPMENT / PATENTS
Both research and development and the costs associated with obtaining
patents have been expensed as incurred. Patent costs are expensed,
since the Company has not yet developed products which have gained
market acceptance.
h. NET LOSS PER SHARE
Net loss per share is computed by dividing the loss attributable to
common shareholders by the weighted average number of shares
outstanding during the period, which was assumed to be 31,111,746 and
21,105,854 for the years ended September 30, 1999 and 1998,
respectively. Stock options and warrants are considered antidilutive
and were not considered in the calculation.
2. OPERATIONS
The Company experienced significant operating losses during 1999 and 1998.
Of the total net losses of $699,085 and $772,545, approximately $350,000
and $370,000 related to stock issued for services in 1999 and 1998,
respectively.
Subsequent to September 30, 1999, the Company raised an additional $720,000
from a private placement of common stock. Management believes that the
additional capital will be adequate to fund operations and research for the
next fiscal year, until the Company can generate revenues. However, there
can be no assurance that these actions will be successful. These financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
F-10
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
September 30, 1999 and 1998
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at September 30, 1999 and
1998:
1999 1998
-------- --------
Computer equipment $ 3,057 $ 3,057
Office furniture 3,623 3,623
-------- --------
6,680 6,680
Less: accumulated depreciation 3,340 2,004
-------- --------
$ 3,340 $ 4,676
======== ========
4. LONG-TERM NOTE PAYABLE
In February 1999, the Company issued a $110,000 promissory note to an
individual, who had previously loaned money to Eden Systems, Inc., the
Company's former subsidiary. The loan bears interest at 10% through
December 31, 2000, at which time all interest and principal are due. The
loan is secured by 500,000 shares of the Company's common stock.
5. PRIVATE PLACEMENT OF COMMON AND PREFERRED STOCK
In conjunction with a private offering to accredited investors during 1997,
the Company issued Class A and Class B warrants to acquire common stock at
50% and 75%, respectively, of the average bid price of the Company's common
stock through January 15, 1998 and July 15, 1998, respectively. During the
year ended September 30, 1998, the Company received $105,558 from the
exercise of the warrants.
On March 15, 1998, the Company issued a $250,000 preferred stock offering
at $5,000 per unit. Each unit consisted of 1,000 shares of convertible
preferred stock and 100,000 Class A common stock purchase warrants. The
preferred stock is non-voting and each unit is convertible into 100,000
shares of common stock. The A Warrants are exercisable at $1 per share and
were to expire March 15, 2000. On October 8, 1998, the Company elected to
offer an additional 50 units under the terms of the March 15, 1998
offering. The offering expired July 31, 1999. In conjunction with this
offering, the expiration date of the warrants was extended until December
31, 2000. All preferred stock has been converted to common stock at
September 30, 1999.
On August 1, 1999, the Company issued a $300,000 common stock offering at
$10,000 per unit. Each unit consisted of 30,000 shares of unrestricted
common stock, 40,000 shares of restricted common stock and 50,000 Class A
common stock warrants. The Class A warrants are exercisable at $1.50 per
share and expire on December 31, 2001. The offering has been amended twice
and each unit now consists of 5,000 shares of unrestricted common stock,
25,000 shares of restricted common stock and 50,000 warrants.
F-11
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
September 30, 1999 and 1998
5. PRIVATE PLACEMENT OF COMMON AND PREFERRED STOCK, CONTINUED
The Company entered into an agreement to obtain unrestricted common stock
from the family of its Chairman. The terms of the agreement provide that
the family will receive 1.88 shares of restricted common stock for each
share of unrestricted common stock used in the offering. Additionally, the
Chairman is to receive 4% of all future corporate gross revenues generated
from the sale of the Company's products.
In conjunction with the August 1, 1999 offering, the Company agreed to
issue one share of common stock to two key employees for each dollar
raised, provided the offering generates a minimum of $150,000. The maximum
number of shares to be issued is 300,000 to each employee. A liability of
$15,000 has been accrued for issuance of the stock at September 30, 1999.
None of the warrants associated with either offering have been exercised at
September 30, 1999.
6. LEASE COMMITMENTS
The Company leases its headquarters in Phoenix, under a non-cancelable
operating lease which expires on September 30, 2001. The lease requires
monthly payments of $2,300 plus sales taxes and contains no renewal or
purchase options.
Future minimum lease obligations at September 30, 1999 are as follows:
Year Ending September 30,
-------------------------
2000 $ 27,600
2001 27,600
--------
$ 55,200
========
Rent expense for the years ended September 30, 1999 and 1998 was
approximately $26,500 and $27,600, respectively.
7. INCOME TAXES
Deferred income taxes consist of the following at September 30, 1999 and
1998:
1999 1998
--------- ---------
Net operating loss carryforwards $ 930,000 $ 685,000
Contribution carryforwards 22,000 13,000
Valuation allowance (952,000) (698,000)
--------- ---------
$ -- $ --
========= =========
F-12
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
September 30, 1999 and 1998
7. INCOME TAXES, CONTINUED
A reconciliation of expected to actual taxes follows:
Expected federal and state tax recovery at 40% $(279,000) $(309,000)
Contribution carryforward 9,000 9,000
Stock compensation 16,000 26,000
Tax benefits not realized - valuation allowance 254,000 274,000
--------- ---------
Financial statement recovery of income taxes $ -- $ --
========= =========
The Company has recorded valuation allowances to offset the value of
deferred tax assets, since it has recorded losses from operations since
1996 and the utilization of those assets is uncertain.
The Company has net operating loss carryforwards of approximately
$2,300,000 at September 30, 1999, which may be used to offset future
federal taxable income through 2019 and state taxable income through 2004.
Due to changes in management, the Company has not filed income tax returns
for several years. Additionally, due to changes in ownership during 1996,
the Company expects that the availability of losses generated prior to that
time will not be significant. Valuation allowances would be recorded to
offset any value assigned, since the Company is in the development stage
and has recorded losses from operations for several years.
8. RELATED PARTY TRANSACTIONS
The Company paid professional and consulting fees, in connection with
product research and development and operations of approximately $548,000
and $370,000 to various officers and key employees of the Company during
the years ended September 30, 1999 and 1998, respectively. Effective
September 1, 1999, the Chairman is to receive compensation of $7,000 per
month subject to cash availability.
9. SALE OF SUBSIDIARIES
Effective September 30, 1997, the Company sold its interest in both the
water treatment and retail divisions of Eden Systems, Inc. The Company was
to receive a down payment of $25,000 and additional payments based upon a
percentage of the future sales generated by Eden's acquirers. The Company
received $25,000 from the sale during the year ended September 30, 1997 and
$12,500 during the year ended September 30, 1999. No additional payments
have been received since that time, nor does management expect to receive
any additional payments related to the sale.
F-13
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
September 30, 1999 and 1998
10. YEAR 2000 DISCLOSURES
The Year 2000 issue results from computer hardware or software programs
written using two digits to identify the year. These computer programs and
hardware were designed and developed without consideration of the impact of
the upcoming change in the century. If not corrected, such hardware and
software programs could create erroneous information by or at the year
2000.
The Company believes that its computer systems are Year 2000 compliant.
However, there can be no assurance that problems will not be encountered or
that the Company will not incur costs associated with Year 2000 issues.
These issues may have an adverse effect on future results of operations.
The Company may also be impacted by the ability of third parties to become
Year 2000 compliant. Those parties include suppliers, customers and other
third party business partners. If the Company's suppliers, customers,
business partners and others are unable to remediate their own Year 2000
issues, the Company may be exposed to financial risk.
11. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments" requires that the Company disclose
estimated fair values for its financial instruments. The following summary
presents a description of the methodologies and assumptions used to
determine such amounts.
Fair value estimates are made at a specific point in time and are based on
relevant market information and information about the financial instrument;
they are subjective in nature and involve uncertainties, matters of
judgment and, therefore, cannot be determined with precision. These
estimates do not reflect any premium or discount that could result from
offering for sale at one time the Company's entire holdings of a particular
instrument. Changes in assumptions could significantly affect the
estimates.
Since the fair value is estimated as of September 30, 1999, the amounts
that will actually be realized or paid at settlement of the instruments
could be significantly different.
The carrying amount of cash and cash equivalents is assumed to be their
fair value because of the liquidity of these instruments. Accounts
receivable, accounts payable and accrued expenses approximate fair value
because of the short maturity of these instruments. The recorded balance of
a note payable is assumed to be the fair value since the rate specified in
the note approximate current market rates.
F-14
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS, CONTINUED
September 30, 1999 and 1998
12. STOCK OPTIONS
The Company from time to time issues stock options for the purchase of
restricted stock to directors, officers, employees and consultants. The
Company does not have a qualified stock option plan for its executives and
employees.
The Company adopted Statement of Financial Accounting Standards No. 123
(FAS 123), "Accounting for Stock-Based Compensation," which permits
entities to recognize as expense over the vesting period the fair value of
all stock-based awards on the date of grant. Under the terms of the
Company's stock options granted to certain directors, officers and
consultants, the Board of Directors, at its sole discretion, will determine
when certain options granted shall be fully vested and exercisable. At
September 30, 1998 and 1999, all outstanding stock options had been deemed
vested, and were fully exercisable at fiscal year end.
In accordance with FAS 123, which was effective as of January 1, 1996, the
fair value of option grants is estimated on the date of grant using the
Black-Scholes option-pricing model for proforma footnote purposes with the
following assumptions used for grants in all years; dividend yield of 0%,
risk-free interest rate of 6%, and expected option life of 2.5 years.
Expected volatility was assumed to be 50% in both 1998 and 1999.
Weighted Weighted
Number Average Average
Of Exercise Fair
Shares Price Value
-------- -------- --------
Options Outstanding, September 30, 1997 34,000 $ .05 $ .51
Granted and reissued 334,000 .09 .16
Exercised (16,000) .05 .47
Canceled and reissued (34,000) .05 .51
-------- ----- -----
Options Outstanding, September 30, 1998 318,000 .09 .18
Granted 270,000 .09 .17
Exercised (496,000) .10 .16
Canceled -- -- --
-------- ----- -----
Options Outstanding, September 30, 1999 92,000 $ .09 $ .17
======== ===== =====
F-15
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1 Certificate of Incorporation of the Registrant
3.2 Form of Bylaws of the Registrant
4.1 Form of Common Stock Certificate
4.2 Form of Preferred Stock Certificate
4.3 Promissory Note Secured by Common Stock of the Registrant in the
amount of $110,000.00 dated December 31, 1998
10.1 Warrant Agreement as part of Private Offering dated August 1, 1999
10.2 Warrant Agreement as part of Private Offering dated March 15, 1998
10.3 Lease Agreement between Targun Properties, Inc. and the Registrant
dated August 21, 1998
10.3(i) First Lease Addendum between Targun Properties, Inc. and the
Registrant dated July 27, 1999
10.3(ii) Second Lease Addendum between Targun Properties, Inc. and the
Registrant dated September 15, 1999
10.4 Assignment Agreement between El-Badawy Amien El-Sharawy, Majid M.
Hashemi and the Registrant for the HETROJUNCTION BIPOLAR
TRANSISTOR HAVING WIDE BANDGAP, LOW INTERDIFFUSION BASE-EMITTER
JUNCTION
10.5 Assignment Agreement between El-Badawy Amien El-Sharawy, Majid M.
Hashemi and the Registrant for the VERTICAL HETROJUNCTION BIPOLAR
TRANSISTOR
10.6 Assignment Agreement between El-Badawy Amien El-Sharawy, Majid M.
Hashemi and the Registrant for the MONOLITHIC INDUCTOR WITH
MAGNETIC FLUX LINES GUIDED AWAY FROM SUBSTRATE
10.7 Assignment Agreement between El-Badawy Amien El-Sharawy, Majid M.
Hashemi and the Registrant for the MONOLITHIC INDUCTOR WITH
MAGNETIC FLUX LINES GUIDED AWAY FROM SUBSTRATE Continuation in
Part
10.8 Assignment Agreement between El-Badawy Amien El-Sharawy, Majid M.
Hashemi and the Registrant for the STATIC MEMORY CELL WITH LOAD
CIRCUIT USING A TUNNEL DIODE
10.9 Assignment Agreement between El-Badawy Amien El-Sharawy and the
Registrant for the TE MODE DIELECTRIC RESONATOR
10.10 Assignment Agreement between El-Badawy Amien El-Sharawy and the
Registrant for the DISTRIBUTED AMPLIFIER AND METHOD THEREFOR
10.11 Assignment Agreement between El-Badawy Amien El-Sharawy and the
Registrant for the DISTRIBUTED AMPLIFIER Continuation in Part
27 Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
NATIONAL SCIENTIFIC CORPORATION
Date: December 30, 1999
By: /s/ L. L. Ross
-----------------------
L. L. Ross
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
By: /s/ Vernon M. Traylor
-----------------------
Vernon M. Traylor
CORPORATE SECRETARY
[SEAL OF THE STATE OF TEXAS]
The State of Texas
SECRETARY OF STATE
CERTIFICATE OF AMENDMENT
OF
NATIONAL SCIENTIFIC CORPORATION
FORMERLY:
AMERICAN MORTGAGE COMPANY, NC.
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Amendment for the above named entity have been received in
this office and are found to conform to law
ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Amendment.
Dated: May 16, 1996
Effective: May 16, 1996
[SEAL OF THE STATE OF TEXAS]
VD
----------------------------------------
Antonio 0. Garza, Jr.
Secretary of State
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of Article 4.04 of the Texas Business Corporation
Act, the undersigned corporation adopts the following articles of amendment to
its articles of incorporation:
ARTICLE ONE
The name of the corporation is AMERICAN MORTGAGE COMPANY, INC.
ARTICLE TWO
The following amendment to the articles of incorporation was adopted by the
shareholders of the corporation on May 14, 1996 changing the name of the
corporation to
NATIONAL SCIENTIFIC CORPORATION
The amendment alters or changes only article one of the original or amended
articles of incorporation, no other article of the original or amended articles
of incorporation are altered or changed by this amendment and the full text of
each provision altered is as follows:
(1) The name of the corporation shall be
NATIONAL SCIENTIFIC CORPORATION
ARTICLE THREE
The number of shares of the corporation outstanding at the time of such adoption
was 10,000,000; and the number of shares entitled to vote thereon was
10,000,000.
ARTICLE FOUR
The number of shares voted for such amendments was in excess of the two--third
(2/3) majority required; and the number of shares voted against such amendment
was less than one-third (1/3) of the shares entitled to vote thereon.
Dated May 15, 1996.
By: /s/ Robert Dultz
------------------------------------
Robert Dultz; Its Chairman,
President and CEO
<PAGE>
[SEAL OF THE STATE OF TEXAS]
The State of Texas
SECRETARY OF STATE
CERTIFICATE OF CORRECTION
OF
NATIONAL SCIENTIFIC CORPORATION
CHARTER NO. 115574
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Correction, duly executed pursuant to the provisions of the
Texas Miscellaneous Corporation Laws Act, have been received in this office and
are found to conform to law.
ACCORDINGLY the undersigned, as Secretary of State, and by virtue of the
authority vested in the Secretary by law, hereby issues this Certificate of
Correction and attaches hereto a copy of the Articles of Correction.
Dated: September 9, 1996
[SEAL OF THE STATE OF TEXAS]
dlm
----------------------------------------
Antonio 0. Garza, Jr.
Secretary of State
<PAGE>
ARTICLES OF CORRECTION
TO
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION
OF
NATIONAL SCIENTIFIC CORPORATION,
FORMERLY AMERICAN MORTGAGE COMPANY
These articles are adopted to correct a document which is an inaccurate record
of corporate action, contains an inaccurate or erroneous statement or was
defectively or erroneously executed, sealed, acknowledged or verified.
ARTICLE ONE
The name of the corporation is NATIONAL SCIENTIFIC CORPORATION
ARTICLE TWO
The document to be corrected is Articles of Amendment to the Articles of
Incorporation which was filed in the Office of the Secretary of State on the
27th day of March, 1995.
ARTICLE THREE
Article Six (on page 2), Article Three (on page 2) and Article Four (on page 2)
of the Articles of Amendment to the Articles of Incorporation are incorrect;
they each indicate that the number of outstanding shares as 400,000, and the
number of shares voted for such amendments as 400,000. Article Five (on page 1),
Article Six (on page 2), Article Three (on page 2), Article Four (on page 2),
Article Five (on page 2) and Article Six (on page 3) of the Articles of
Amendment to the Articles of Incorporation are incorrectly numbered.
ARTICLE FOUR
Articles Five through Nine of the Articles of Amendment to the Articles of
Incorporation read correctly as follows:
"ARTICLE FIVE
The aggregate number of shares which the Corporation shall have authority to
issue is eighty million (80,000,000) shares of common stock of the par value S.
01 each and four million (4,000.000) shares of preferred stock of the par value
$. 10 each. Each of the 50,000 shares of Common Stock $2.00 par value, presently
outstanding shall upon the filing of this amendment with the Secretary of the
State of Texas be reconstituted as and become converted into two hundred (200)
fully paid and nonassessable shares of common stock of the Corporation, $.01 par
<PAGE>
value, and shares of Preferred Stock, $1.00 par value, presently outstanding, if
any shall upon the filing of this amendment with the Secretary of the State of
Texas be reconstituted as and become converted into ten (10) fully paid and
nonassessable shares of preferred stock of the Corporation, $.10 par value,
without any further action on the part of the Board of Directors or the
shareholders.
ARTICLE SIX
The number of shares of the corporation outstanding at the time of such adoption
was 50,000; and the number of shares entitled to vote thereon was 50,000.
ARTICLE SEVEN
The number of shares voted for such amendments was 45,571; and the number of
shares voted against such amendment was 0.
ARTICLE EIGHT
The manner in which any exchange, reclassification or cancellation of issued
shares provided for in the amendment shall be effected is as follows:
The present holder of 1 share of $2.00 par value common stock may exchange the
share for 200 shares of $.01 par value common stock The present holder, if any,
of 1 share of $1.00 par value preferred stock may exchange the share for 10
shares of $.10 par value preferred stock
ARTICLE NINE
The manner in which such amendment effect a change in the amount of stated
capital, and amount of stated capital as changed by such amendment are as
follows: NONE."
Dated August 26, 1996
NATIONAL SCIENTIFIC CORPORATION
/s/ Terry Neild
----------------------------------------
Terry Neild, President
BY-LAWS
OF
NATIONAL SCIENTIFIC CORPORATION
A TEXAS CORPORATION
ARTICLE I
SHAREHOLDERS
1. SHARE CERTIFICATES. Certificates representing shares prescribed by
Articles 2.19 and 2.22 of the Texas Business Corporation Act and by any other
applicable application of law, including any limitation or denial of preemptive
rights, which shall be signed by the President and/or a Vice-President and/or
the Chairman of the Board of Directors and/or the Secretary of the corporation,
and may be sealed with the seal of the corporation or a facsimile thereof. The
signatures of any such officers upon a certificate may be facsimiles. In case
any officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if be were
such officer at the date of its issuance.
No certificate shall be issued for any share until the consideration
therefor has been fully paid.
2. FRACTIONAL SHARE INTERESTS OR SCRIP. The corporation may issue fractions
of a share, arrange for the disposition of fractional interests by those
entitled thereto, pay in cash the fair value of fractions of a share as of the
time when those entitled to receive such fractions are determined, or issue
scrip in registered or bearer form, which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip aggregating a full
share. A certificate for a fractional share shall, but scrip shall not, unless
otherwise provided there-in, entitle the holder to exercise voting rights, to
receive dividends thereon, and to participate in any of the assets of the
corporation in the event of liquidation. The Board of Directors may cause scrip
to be issued subject to the condition that it shall become void if not exchanged
for certificates representing full shares before a specified date, or subject to
the condition that the shares for which the scrip is exchangeable may be sold by
the corporation and the proceeds thereof distributed to the holders of scrip, or
subject to any other conditions which the Board of Directors may determine
advisable.
3. SHARE TRANSFERS. Upon compliance with any provisions restricting the
transferability of shares that may be set forth in the Articles of
Incorporation, these Bylaws, or any written agreement in respect thereof, and,
in accordance with the provisions of Articles 2.19 and 2.22 of the Texas
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 1 of 10
<PAGE>
Business Corporation Act, transfers of shares of the corporation shall be made
only on the share transfer records of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation, or with a transfer
agent or a registrar and on surrender of the certificate or certificates or such
shares properly endorsed and the payment of all taxes thereon, if any. Except as
may be otherwise provided by law, the person in whose name shares stand on the
share transfer records of the corporation shall be deemed the owner thereof for
all purposes as regards the corporation; provided that whenever any transfer of
shares shall be made for collateral security, and not absolutely, such fact, ii
known to the Secretary of the corporation, shall be so expressed in the entry of
transfer.
4. RECORD DATE FOR SHAREHOLDERS, For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive a distribution (other than a
distribution involving a purchase or redemption by the corporation of any of its
own shares) or a share dividend, or in order to make a determination of
shareholders for any other proper purpose (other than determining shareholders
entitled to consent to action by shareholders proposed to be taken without a
meeting of shareholders), the Board of Directors of the corporation may provide
that the share transfer records shall be closed for a stated period not to
exceed, in any case, sixty days. If the share transfer records shall be closed
for the purpose of determining the shareholders entitled to notice of or to vote
at a meeting of shareholders, such share transfer records shall be closed for at
least ten days immediately preceding such meeting. In lieu of closing the share
transfer records, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date to be not more than
sixty days and, in case of a meeting of shareholders, not less than ten days
prior to the date on which the particular action, requiring such determination
of shareholders, is to be taken. If the share transfer records are not dosed and
no record date is fixed for any determination of shareholders, the date on which
notice of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such distribution or share dividend is adopted, as the
case may be, shall be the record date for the determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the dosing of share transfer records and the stated period of closing
has expired. Unless a record date shall have previously been fixed or determined
pursuant to this section, whenever action by shareholders is proposed to be
taken by consent in writing without a meeting of shareholders, the Board of
Directors may fix a record date for the purpose of determining shareholders
entitled to consent to that action, which record date shall not precede, and
shall not be more than ten days after, the date upon which the resolution fixing
the record date is adopted by the Board of Directors. If no record date has been
fixed by the Board of Directors and the prior action of the Board of Directors
is not required by the Texas Business Corporation Act, the record dare for
determining shareholders entitled to consent to action in writing without a
meeting shall be the first date on which a signed written consent setting forth
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 2 of 10
<PAGE>
the action taken or proposed to be taken is delivered to the corporation as
provided in Section A of Article 9.10 of the Texas Business Corporation Act or
an officer or agent of the corporation having custody of the books in which
proceedings of meetings of shareholders are recorded. Delivery shall be by hand
or by certified or registered mail, return receipt requested. Delivery to the
Corporation's principal place of business shall be addressed to the president or
the principal executive officer of the corporation. If no record date shall have
been fixed by the Board of Directors and prior action of the Board of Directors
is required by the Texas Business Corporation Act, the record date for
determining shareholders entitled to consent to action in writing without a
meeting shall be at the close of business on the dare on which the Board of
Directors adopts a resolution taking such prior action.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of shareholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu `of a meeting, as the
case may be, the term "share" or "shares" or "shareholder" or "shareholders'!
refers to an outstanding share or shares and to a holder or holders of record of
outstanding shares when the corporation is authorized to issue only one class of
shares, and said reference is also intended to include any outstanding share or
shares and any holder or holders of outstanding shares of any class upon which
or upon whom the Articles of Incorporation confer such rights where there are
two or more classes or series of shares or upon which or upon whom the Texas
Business Corporation Act confers such rights notwithstanding that the Articles
of Incorporation may provide for more than one class or series of shares, one or
more of which are limited or denied such rights thereunder.
6. SHAREHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date fixed from time to
time by the Board of Directors; provided that any such date shall not be more
than thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date fixed by the directors except when the Texas
Business Corporation Act confers the right to call a special meeting upon the
shareholders,
- PLACE. Annual meetings and special meetings shall be held at such place
within or without the State of Texas as shall be fixed from time to time by the
Board of Directors. In the event of failure of the Board of Directors to fix
such place, any such meeting shall be held at the registered office of the
corporation in Texas.
- CALL. Annual meetings may be called by the directors or the President or
by any officer instructed by the directors or the President to call the meeting.
Special meetings may be called in like manner or by any other person or persons
authorized to do so by the provisions of the Texas Business Corporation Act.
- NOTICE OR WAIVER OF NOTICE. Written or printed notice stating the place,
day, and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 3 of 10
<PAGE>
days (or not less than any such other minimum period of days as may be
prescribed by the Texas Business Corporation Act) nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the officer or person calling the
meeting, to each shareholder. The notice of any annual meeting shall also
contain a statement of the purpose or purposes thereof whenever the Texas
Business Corporation Act shall require such statement The notice of any annual
or special meeting shall also include, or be accompanied by, any additional
statements, information, or documents prescribed by the Texas Business
Corporation Act. Whenever any notice is required to be given to any shareholder,
a waiver thereof in writing signed by any such shareholder, whether before or
after the time stated therein, shall be the equivalent to giving such notice.
Notice need not be given to a shareholder in circumstances in which the Texas
Business Corporation Act authorizes the omission of such notice.
- VOTING LIST. The officer or agent having charge of the share transfer
records for shares of the corporation shall make, at least ten days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
the meeting or any adjournment thereof, arranged in alphabetical order, with the
address of, and the number of shares held by, each. The list shall be kept on
file at the registered office or principal place of business of the corporation
in the State of Texas for a period of at least ten days prior to the meeting and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting. The original share transfer records shall
be prima fade evidence as to who are the shareholders entitled to examine such
list or share transfer records or to vote at any meeting of shareholders.
- CONDUCT OF MEETING. Meetings of the shareholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - the Chairman of the Board, if any, the Vice-Chairman of the Board, if
any, the President, a Vice-President, or, if none of the foregoing is in office
and present and acting, by a chairman to be chosen by the shareholders. The
Secretary of the corporation, or in his absence, an Assistant Secretary, shall
act as secretary of every meeting, but, if neither the Secretary nor an
Assistant Secretary is present, the Chairman of the meeting shall appoint a
secretary of the meeting.
- PROXY REPRESENTATION. Every shareholder may authorize another person or
persons to act for him by proxy in all matters in which a shareholder is
entitled to participate, whether for the purposes of determining his presence at
a meeting, or whether by waiving notice of any meeting, voting or participating
at a meeting, or expressing consent or dissent without a meeting, or otherwise.
Every proxy shall be executed in writing by the shareholder. No proxy shall be
valid after eleven months from the date of its execution, unless otherwise
provided in the proxy.
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 4 of 10
<PAGE>
- INSPECTORS - APPOINTMENT. The directors, in advance of any meeting, may,
but need not, appoint one or more inspectors to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum, the validity
and effect of proxies, and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders. On request of the person presiding at the meeting or any
shareholder, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. With respect to any matter, a quorum shall be present at a
meeting of shareholders if the holders of a majority of the shares entitled to
vote on that matter are represented at the meeting in person or by proxy. Once a
quorum is present at a meeting of shareholders, the shareholders represented in
person or by proxy at the meeting may conduct such business as may properly be
brought before the meeting until it is adjourned, and the subsequent withdrawal
from the meeting of any shareholder or the refusal of any shareholder
represented in person or by proxy to vote shall not affect the presence of a
quorum at the meeting. The shareholders represented in person or by proxy at a
meeting of shareholders at which a quorum is not present may adjourn the meeting
until such time and to such place as may be determined by a vote of the holders
of a majority of the shares represented in person or by proxy at that meeting.
- VOTING. Shareholders shall not be entitled to cumulate their votes in the
election of directors. In the election of directors, a plurality of the votes
cast shall elect. Except as the Texas Business Corporation Act, the Articles of
Incorporation, or these Bylaws may otherwise provide, the affirmative vote of
the holders of a majority of the shares entitled to vote on that matter and
represented in person or by proxy at a meeting of shareholders at which quorum
is present shall be the act of the shareholders.
7. INFORMAL ACTION. Any action required by the Texas Business Corporation
Act to be taken at a meeting of shareholders, and any action which may be taken
at any annual or special meeting of shareholders may be taken without a meeting,
without prior notice, and without a vote if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holder or holders of
shares having not less than the minimum number of votes that would be necessary
to take such action at a meeting at which the holders of all shares entitled to
vote on the action were present and voted. Prompt notice of the taking of any
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 5 of 10
<PAGE>
action by shareholders without a meeting by less than unanimous written consent
shall be given to those shareholders who did not consent in writing to the
action. Every written consent signed by the holders of less than all the shares
entitled to vote with respect to the action that is the subject of the consent
shall bear the date of signature of each shareholder who signs the consent. No
written consent signed by the holders of less than all the shares entitled to
vote with respect to the action that is the subject of the consent shall be
effective to take the action that is the subject of the consent unless, within
sixty days after the date of the earliest dated consent delivered to the
corporation in the manner required by Article 9.10 of the Texas Business
Corporation Act, a consent or consents signed by the bolder or holders of shares
having not less than the minimum number of votes that would be necessary to take
the action that is the subject of the consent are delivered to the corporation
by delivery to its registered office, registered agent, principal place of
business, transfer agent, registrar, exchange agent, or an officer or agent of
the corporation having custody of the books in which proceedings of meetings of
shareholders are recorded. Delivery shall be by hand or certified or registered
mail, return receipt requested. Delivery to the corporation's principal place of
business shall be addressed to the president or principal executive officer of
the corporation. A telegram, telex, cablegram, or similar transmission by a
shareholder, or a photographic, photostatic, facsimile, or similar reproduction
of a writing signed by a shareholder, shall be regarded as signed by the
shareholder for purposes of this section. Subject to the provisions required or
permitted by the Texas Business Corporation Act for notice of meetings,
shareholders may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear, read or otherwise apprehend the
communications of each other. Participation in a meeting pursuant to this
paragraph shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened,
ARTICLE II
BOARD OF DIRECTORS
1. FUNCTIONS GENERALLY. The powers of the corporation shall be exercised by
or under the authority of, and the business and affairs of the corporation shall
be managed under the direction of, a Board of Directors.
2. QUALIFICATIONS AND NUMBER. A director need not be a shareholder, a
citizen of the United States, or a resident of the State of Texas. The Board of
Directors shall consist of not less than three persons, which is the minimum
number of directors fixed in the Articles of Incorporation, as amended, and
which shall be the fixed minimum number of directors until changed. The number
of directors may be increased or decreased by an amendment to these Bylaws or by
other action of the directors or the shareholders, but no decrease in the number
of directors shall have the effect of shortening the term of any incumbent
director. The number of directors shall never be less than one. The full Board
of Directors shall consist of the number of directors fixed herein.
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<PAGE>
3. ELECTION AND TERM. The initial Board of Directors shall consist of the
directors named in the Articles of Incorporation and shall hold office until the
first annual meeting of shareholders and until their successors have been
elected and qualified. Thereafter, directors who are elected at an annual
meeting of shareholders, and directors who are elected in the interim to fill
vacancies and newly created directorships, shall hold office until the next
succeeding annual meeting of shareholders and until their successors have been
elected and qualified, In the interim between annual meetings of shareholders or
of special meetings of shareholders called for the election of directors, any
vacancies in the Board of Directors, including vacancies resulting from the
removal of directors by the shareholders but which are not filled by said
shareholders, may be filled by the affirmative vote of a majority of the
remaining directors, although less than a quorum exists. Subject to any
limitations imposed by Article 2.34 of the Texas Business Corporation Act, any
directorship to be filled by reason of an increase in the number of directors
may be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the State
of Texas as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairman of the Board, if any, the Vice-Chairman of the Board, if any, f
the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral, or
any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. The notice of any meeting need not specify the business to be
transacted or the purpose of the meeting. Any requirement of furnishing a notice
shall be waived by any director who signs a waiver of notice before or after the
meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of the meeting, except where the director attends the meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
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<PAGE>
- QUORUM AND ACTION. A majority of the full Board of Directors shall
constitute a quorum unless a different number or portion is required by law.
Except as herein otherwise provided, and except as may be otherwise provided by
law, the Articles of Incorporation, or these Bylaws, the act of a majority of
the directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors.
- CHAIRMAN OF THE MEETING. Meetings of the Board of Directors shall be
presided over by the following persons in the order of seniority and if present
and acting -the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, or any other director chosen by the Hoard.
5. REMOVAL OF DIRECTORS. The entire Board of Directors or any individual
director may be removed from office with or without cause by the holders of a
majority of the shares then entitled to vote at an election of directors at a
meeting expressly called for that purpose. In case the entire Board or any one
or more directors be so removed, new directors may be elected at the same
meeting.
6. COMMITTEES. The Board of Directors, may, by resolution adopted by a
majority of the full Board, designate from among its members one or more
committees, each of which shall be comprised of one or more of its members, and
may designate one or more of its members as alternate members of any committee,
who may, subject to any limitations imposed by the Board, replace absent or
disqualified members at any meeting of that committee, Any such committee, to
the extent provided in the resolution, shall have and may exercise all of the
authority of the Board of Directors except such authority as may not be
delegated under the Texas Business Corporation Act.
7. INFORMAL ACTION. Any action required or permitted to be taken at a
meeting of directors or of any committee,, ii any, may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the members of the Board of Directors or committee, as the case
may be. Subject to the provisions required or pennitted by the Texas Business
Corporation Act for notice of meetings, members of the Board of Directors, or
members of any committee designated by the Board of Directors, may participate
in and hold a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this paragraph shall
constitute presence in person at such meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE III
OFFICERS
The corporation shall have a President and a Secretary, each of whom shall
be elected by the Board of Directors at such time and in such manner as the
Board may deem appropriate. The corporation may have such other officers,
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 8 of 10
<PAGE>
including assistant officers, and agents as may be deemed necessary, each or any
of whom may be elected or appointed by the directors or may be chosen in such
manner as the directors shall determine. Any two or more offices may be held by
the same person.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of shareholders and until his successor has
been elected and qualified.
The officers and agents of the corporation shall have the authority and
perform the duties in the management of the corporation as determined by the
resolution electing or appointing them, as the case may be.
The Board of Directors may remove any officer or agent whenever in its
judgment the best interests of the corporation will be served thereby.
ARTICLE IV
REGISTERED OFFICE AND AGENT - SHAREHOLDERS RECORD
The address of the initial registered office of the corporation and the
name of the initial registered agent of the corporation are set forth in the
original Articles of Incorporation.
The corporation shall keep at its registered office in the State of Texas
or at its principal place of business, or at the office of its transfer agent or
registrar, if any, a record of its shareholders, as prescribed by Article 2.44
of the Texas Business Corporation Act and shall keep on file at said registered
office the voting list of shareholders for a period of at least ten days prior
to any meeting of shareholders.
ARTICLE V
CORPORATE SEAL
The corporate seal shall have inscribed thereon the name of the corporation
and shall be in such form and contain such other words and/or figures as the
Board of Directors shall determine or the law require.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
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<PAGE>
ARTICLE VII
CONTROL OVER BY-LAWS
After the adoption of the initial Bylaws by the initial Board of Directors,
the Board of Directors may amend or repeal the Bylaws or adopt new Bylaws except
as otherwise provided by Article 2.23 of the Texas Business Corporation Act or
any other applicable provision of law.
The Board of Directors may remove any officer or agent whenever in its
judgment the best interests of the corporation will be served thereby.
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of the
Bylaws of NATIONAL SCIENTIFIC CORPORATION, a corporation of the State of Texas,
as in effect on the date hereof.
WITNESS my hand and the seal of the corporation.
Dated: June 11, 1996
/s/ Terry W. Neild
----------------------------------------
Terry W. Neild, President of
NATIONAL SCIENTIFIC CORPORATION
(SEAL)
By-Laws of NATIONAL SCIENTIFIC CORPORATION Page 10 of 10
SPECIMEN
COMMON STOCK COMMON STOCK
NUMBER SHARES
US NATIONAL SCIENTIFIC CORPORATION
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 637479 10 6
INCORPORATED UNDER THE LAWS
OF THE STATE OF TEXAS
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF PREFERRED STOCK, $.10 PAR VALUE OF
NATIONAL SCIENTIFIC CORPORATION
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be subject to all of the provisions of the Articles of Incorporation and
By-laws of the Corporation, each as from time to time amended, copies of which
are on file with the Transfer Agent, to all of which the holder by acceptance
hereof assents.
This Certificate is not valid until countersigned and registered by the
Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
/s/ Vernon Traylor Jr. /s/ L. L. Ross
CORPORATE SECRETARY [CORPORATE SEAL] CHAIRMAN OF THE BOARD
COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION
TRANSFER AGENT AND REGISTRAR
By:
AUTHORIZED SIGNATURE
<PAGE>
The Articles of Incorporation of the Corporation on file in the office of
the Secretary of State of Texas set forth (a) the aggregate number of shares and
the par value of each class of capital shares that the Corporation is authorized
to issue, together with the designations, preferences, limitations and relative
rights of each such class; (b) a statement of the authority vested in the Board
of Directors to establish series and to fix and determine the variations in the
relative rights and preferences between any such series of the Preferred Stock
so established; (c) a denial of preemptive rights of the shareholders to acquire
additional, unissued or treasury shares of the Corporation; and (d) to the
record holder of this certificate without charge upon written request to the
corporation at its registered office.
The Corporation shall furnish without charge to each stockholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation's Secretary at the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT - ................ Custodian for ..............
(Cust.) (Minor)
TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors
Act ...............................................
JT TEN -- as joint tenants with right (State)
of survivorship and not as UNIF TRF MIN ACT - ................ Custodian (until age .......)
tenants in common ................. under Uniform Transfers
(Minor)
to Minors Act ................................
(State)
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received ....................... hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares
- -------------------------------------------------------------------------
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- -----------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation,
with full power of substitution in the premises.
Dated ___________________________________
X ______________________________________
X ______________________________________
NOTE: THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
Signature(s) Guaranteed
By _____________________________________
THE SIGNATURE(S)SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
SPECIMEN
NATIONAL SCIENTIFIC CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
NUMBER SHARES
SEE REVERSE FOR
CERTAIN DEFINITIONS
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF PREFERRED STOCK, $.10 PAR VALUE OF
NATIONAL SCIENTIFIC CORPORATION
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and registered by
the Transfer Agent and Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by the facsimile signatures of its duly authorized officers and to be
sealed with the facsimile seal of the Corporation.
Dated:
/s/ Vernon Traylor Jr. /s/ L. L. Ross
CORPORATE SECRETARY [CORPORATE SEAL] CHAIRMAN OF THE BOARD
COUNTERSIGNED:
CORPORATE STOCK TRANSFER, INC.
370 - 17th Street, Suite 2350, Denver, Colorado 80202
By: ___________________________________________
Transfer Agent and Registrar Authorized Officer
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
CORPORATE STOCK TRANSFER, INC.
TRANSFER FEE: $15.00 PER CERTIFICATE
- --------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT - ................ Custodian for ..............
(Cust.) (Minor)
TEN ENT -- as tenants by the entireties under Uniform Gifts to Minors
JT TEN -- as joint tenants with right of Act of ............................................
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
</TABLE>
For value received ....................... hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
--------------------------------------
--------------------------------------
Please print or type name and address of assignee
................................................................................
................................................................................
................................................................................
......................................................................... Shares
of the Preferred Stock represented by the within Certificate and do hereby
irrevocably constitute and appoint
................................................................................
................................................................................
Attorney to transfer the said stock on the books of the within named
Corporation, with full power of substitution in the premises.
Dated ...................... 19 ..........
SIGNATURE GUARANTEED: X ______________________________________
X ______________________________________
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN
UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S) MUST BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan
Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM PURSUANT TO RULE 17Ad-15 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
PROMISSORY NOTE
$110,000.00 Scottsdale, Arizona
December 31, 1998
For valuable consideration, the receipt of which is hereby acknowledged,
and to resolve an existing dispute as more fully set forth in that certain
Agreement dated February 5th 1999, National Scientific Corporation, a Texas
corporation, and Eden Systems Inc., an Arizona corporation (collectively
"Make?'), hereby promises to pay to Shirley Bonifasi the principal sum of One
Hundred Ten Thousand Dollars ($110,000.00), together with interest thereon at
10% per annum from the date of this Note until paid. Principal and accrued
interest shall be paid in lawful money of the United States of America
The principal sum of $110,000.00 and the accrued interest shall be paid in
its entirety in a lump sum payment due on December 31, 2000.
Maker shall have the right to prepay the principal balance; and accrued
interest to date of payment, in one lump sum at any time without penalty.
Maker promises to pay, in addition to the amount found due hereunder, all
collection costs incurred by the holder, including reasonable attorney's fees,
should the holder seek to enforce its rights under this Note, including but not
limited to bringing a legal action therefore. Any legal action shall be brought
in the Superior Court for the County of Maricopa, State of Arizona, and be
subject to the laws of the State of Arizona.
Maker and any endorsers hereof waive diligence, demand, presentment for
payment and protest, and consent to the extension of time of payment of this
Note without notice. Holder has a right to assign this Note or any interest
therein, together with the collateral being provided as security therefore,
without notice to Maker.
This Note is secured by 500,000 shares of National Scientific Corporation
common stock.
DATED on the date set forth above.
National Scientific Corporation,
a Texas corporation
By /s/ L. L. Ross
-------------------------------------
L.L. Ross, President
Eden Systems, Inc.
an Arizona corporation,
By /s/ L. L. Ross
-------------------------------------
L.L. Ross, President
WARRANT AGREEMENT
NATIONAL SCIENTIFIC CORPORATION
THIS AGREEMENT (the "Agreement"), dated as of 1999, is between NATIONAL
SCIENTIFIC CORPORATION (the "Company") and (the "Holder").
WHEREAS, in conjunction with an offering of up to thirty (30) blocks (the
("Blocks"), each Block consisting of thirty thousand (30,000) shares of
non-restricted Common Stock, par value $0.01 per share, forty thousand (40,000)
shares at restricted Common Stock, par value $0.01 per share and fifty thousand
(50,000) Class A Common Stock Purchase Warrants ("A Warrants or Warrants"), the
Company and the Holder desire to enter into this Agreement governing the terms
of the A Warrants.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set, the parties agree as follows:
SECTION 1. A WARRANTS AND FARM OF A WARRANT CERTIFICATES.
(A) Each A Warrant shall entitle the Holder of the certificate
representing such A Warrant to purchase upon the exercise thereof
one (i) share of Common Stock, subject to the adjustments
provided for in Section 8 hereof, at any time after issuance,
until December 31, 2001 ("A Expiration Date") with respect to the
A Warrants.
(B) The A Warrant certificates shall be in registered form only. The
text of the A Warrant certificate and the form of election to
exercise an A Warrant shall be substantially in the form of the
exhibit attached hereto. Each A Warrant certificate shall be
dated as of the date of issuance (whether upon initial issuance
or upon transfer or exchange), and shall be executed on behalf of
the Company by the manual or facsimile signature of its President
or a Vice President, and attested to by the manual or facsimile
signature of its Secretary or an Assistant Secretary.
SECTION 2. EXERCISE OF A WARRANTS, DURATION AND A WARRANT PRICE. Subject to
the provisions of this Agreement, each registered Holder of one or more A
Warrant certificates shall have the right, which may be exercised as in such A
Warrant certificates expressed, to purchase from the Company (and the Company
shall issue and sell to such registered Holder) the number of shares of Common
Stock to which the A Warrants represented by such certificates are at the time
entitled hereunder.
Each A Warrant not exercised by its A Expiration Date shall become void,
and all rights thereunder and all rights in respect thereof under this Agreement
shall cease on such date.
1
<PAGE>
A Warrants may be exercised by the surrender of the certificate
representing such A Warrants to the Company, at the office of the Company, with
the subscription farm set forth duly executed and properly endorsed with the
signatures properly guaranteed, and upon payment in full to the Company of the A
Warrant Price (as defined hereinafter) for the number of shares of Common Stock
as to which the A Warrant is exercised. Such A Warrant Price shall be paid in
full in cash, or by certified check of bank draft payable in United States
currency to the order of the Company.
The price per share of the Common Stack at which the A Warrants may be
exercised shall be one dollar and fifty cents ($1.50) per share with no regard
to the bid or ask price of the stock on, before or after the date the Holder
chooses to exercise the A Warrants. The A Expiration Date will be, as previously
stated in Section 1(A), December 31, 2001.
Subject to the further provisions of this Section 2 and of Section 5
hereof, upon such surrender of A Warrant certificates and payment of the of the
A Warrant Price as aforesaid, the Company, shall issue and cause to be
delivered, with all reasonable dispatch to or upon the written order of the
registered Holder of such A Warrants and in such name or names as such
registered Holder may designate, a certificate or certificates for the number of
securities so purchased upon the exercise of such A Warrants, together with
cash, as provided in Section 9 of this Agreement, in respect of any fraction of
a share or security otherwise issuable upon such surrender. All shares of Common
Stock issued, upon the exercise of A Warrants shall be validly issued, fully
paid and non-assessable.
Certificates representing such securities shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a Holder of record of such securities as of the date of the surrender of
such A Warrants and payment of the A Warrant Price as aforesaid; provided,
however, that is, at the date of surrender of such A Warrants and payment of
such A Warrant Price, the transfer books for the Common Stock or other
securities purchasable upon the exercise of such A Warrants are then exercised
shall he issuable as of the date on which such books shall next be opened and
until such date the Company shall be under no duty to deliver any certificate
for such securities, The rights of purchase represented by each A Warrant
certificate shall be exercisable, at the election of the registered Holders
thereof, either as an entirety or from time to time for part of the number of
securities specified therein and, in the event that any A Warrant certificate is
exercised in respect of less that all of the securities specified therein at any
time prior to the A Expiration Date of the A Warrant certificate, a flew A
Warrant certificate or certificates will be issued to such registered Holder for
the remaining number securities specified in the A Warrant certificate so
surrendered.
SECTION 3. COUNTERSIGNATURE AND RESIGNATION The Company shall maintain
books (the "A Warrant Register) for the registration and the registration of
transfer of the A Warrants. Upon the initial issuance of the A Warrants, the
Company shall issue and register the A Warrants in the names of the respective
Holders thereof. The A Warrant certificates shall be countersigned manually or
by facsimile by an officer of the Company and attested to by an officer of the
Company.
2
<PAGE>
Prior to due presentment for registration of transfer of any Warrant
certificate the Company may deem and treat the person in whose name such Warrant
certificate shall be registered upon the Warrant Register (the "registered
Holder") as the absolute owner of such Warrant certificate and of each Warrant
represented thereby (notwithstanding any flotation of ownership or other writing
on the Warrant certificate made by anyone other than the Company or the Warrant
Agent), for the purpose of any exercise thereof, of any distribution or notice
to the Holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
SECTION 4. TRANSFER AND EXCHANGE OF WARRANTS. The Company shall register
the transfer, from time to time, of any outstanding Warrant upon the warrant
Register, upon surrender of the certificate evidencing such Warrant for
transfer, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant
certificate representing an equal aggregate number of Warrants shall be issued
to the transferee and the surrendered Warrant certificate shall be canceled by
the Company.
Warrant certificates may he surrendered to the Company together with a
written request for exchange, and thereupon the Company shall issue in exchange
therefor one or more new Warrant certificates as requested by the registered
Holder of the Warrant certificate or certificates so surrendered, representing
an equal aggregate number of Warrants.
SECTION 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of the shares of Common Stock
issuable upon the exercise of Warrants; provided, however, the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates for shares of
Common Stock in a name other than registered Holder of Warrants in respect of
which are issued, and in such case the Company shall not be required to issue or
deliver any for shares of Common Stock or any Warrant until the person
requesting the same has paid the amount of such tax or has established to the
Company's satisfaction that such tax has been paid.
SECTION 6. MUTILATED OR MISSING WARRANTS. in case any of the Warrant
certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue a new Warrant certificate, and THE COMPANY IN EXCHANGE AND
SUBSTITUTION THEREFOR AND UPON CANCELLATION OF THE MUTILATED WARRANT
CERTIFICATE, OR IN LIEU OF AND SUBSTITUTION FOR THE WARRANT CERTIFICATE LOST
STOLEN OR DESTROYED, shall countersign and deliver a new Warrant certificate
representing an equal aggregate number of Warrants, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant certificate and reasonable indemnity, it requested, also satisfactory to
them. Applicants for such substitute Warrant certificates shall also comply with
such other reasonable conditions and pay such reasonable charges as the Company
may prescribe.
SECTION 7. RESERVATION OF COMMON STOCK. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Warrants then outstanding,
and the transfer agent for the Common Stock, and every subsequent transfer agent
for any shares of the Company's capital stock issuable upon the exercise of any
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of the rights of purchase aforesaid, are hereby irrevocably authorized and
directed at all times to reserve such number of authorized and unissued shares
as shall be requisite for such purpose.
SECTION 8. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 ADJUSTMENTS. The number of shares of Common Stock purchasable upon
the exercise of each Warrant arid the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stuck into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common
stock, other securities of the Company, the number of shares of Common
Stock purchasable upon exercise of a Warrant immediately prior thereto
shall be adjusted so that the Holder of a Warrant shall be entitled to
receive the kind and number of shares of Common Stock or other securities
of the Company which such Holder would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subsection 8.1(a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall issue rights, options, Warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling them to subscribe for
or purchase Common Stock at a price per share which is lower at the record
date mentioned below than the then Current Market Price (as defined in
Section 9 hereof), the number of shares of Common Stock thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of shares of Common Stock theretofore purchasable
upon exercise of a Warrant by a fraction, of which the numerator shall be
the number of shares of Common Stock outstanding immediately prior to the
issuance of such rights, options. Warrants or convertible securities plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, Warrants or convertible securities plus the number of shares which
the aggregate offering price of the total number of shares offered would
purchase at such Current Market Price. Such adjustment shall be made
whenever such rights, options. Warrants or convertible securities are
issued, and shall become effective immediately and retroactive to the
record date for the determination of stockholders entitled to receive such
rights, options. Warrants or convertible securities.
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<PAGE>
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock, evidences of its indebtedness or assets
(excluding cash dividends or distributions cut of earnings) or rights,
options, Warrants or convertible securities containing the right to
subscribe for or purchase Common Stock (excluding those referred to in
subsection 8.1(b) above), then in each case the number of shares of Common
Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Common Stock theretofore
purchasable upon exercise of such Warrant by a fraction, of which the
numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market
Price on such date minus the then fair value of the portion of the assets
or evidences of indebtedness so distributed or of such subscription rights,
options, Warrants or convertible securities applicable to one share. Such
adjustment shall be made whenever any such distribution is made and shall
become effective on the date of distribution retroactive to the record date
for the determination of stockholders entitled to receive such
distribution.
(d) No adjustment in the number of shares of Common Stock purchasable
pursuant to the Warrants shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of
shares of Common Stock then purchasable upon the exercise of the Warrants;
provided, however, that any adjustments which by reason of this subsection
8.1(d) are not required to be made immediately shall be carried forward and
taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Common Stock purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which
the numerator shall he the number of shares of Common Stock purchasable
upon the exercise of such Warrant immediately prior to such adjustment, and
of which the denominator shall be the number of shares of Common Stock so
purchasable immediately thereafter.
8.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section 8.1
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
8.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Company an
agreement that the registered holders of the Warrants shall have the right
thereafter, upon payment of the Warrant Price in effect immediately prior to
such action, to purchase, upon exercise of each Warrant, the kind and amount of
shares and other securities and property which it would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale or
conveyance had each Warrant been exercised immediately prior to such action. In
the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, in which the Company is the surviving corporation, the
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right to purchase shares of Common Stock under the Warrants shall terminate on
the date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrants which entitle the holders thereof to purchase upon this
exercise the kind and amount of shares and other securities and property which
they could have owned or been entitled to receive had the Warrants been
exercised immediately prior to such merger. Any such agreements referred to in
this subsection 8.3 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in section 9
hereof. The provisions of this subsection 8.3 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractional shares of common Stock on the exercise of a Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this Section 9,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company shall in lieu thereof pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market and flat in the NASDAQ National Market System nor on any
national securities exchange, the average of the per share closing bid prices of
the Common Stock on the thirty (30) consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded in the NASDAQ
National Market System or on a national securities exchange, the average for the
thirty (30) consecutive trading days immediately preceding the date in question
of the daily per share closing prices of the Common Stock in the NASDAQ National
Market system or on the principal stock exchange on which it is listed, as the
case may be. For purposes of clause (i) above, if trading in the Common Stock is
not reported by NASDAQ, the bid price referred to in said clause shall be the
lowest bid price as reported by National Quotation Bureau, Incorporated. The
closing price referred to in clause (ii) above shall be the last reported sale
price or, in the case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices, in either case in the NASDAQ
National Market System or on the national securities exchange on which the
Common Stock is then listed.
SECTION 10. RIGHTS AS WARRANTHOLDERS. Nothing contained in this Agreement
or in any of the Warrants shall be construed as conferring upon the holders
thereof, as such, any of the rights of stockholders of the Company, including,
without limitation, the right to receive dividends or other distributions, to
exercise any preemptive rights, to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter. Anything herein to the contrary
notwithstanding, the Company shall cause copies of all financial statements and
reports, proxy statements and other documents as it shall send to its
stockholders to be sent by the same class mail as sent to its stockholders,
postage prepaid, on the date of the mailing to such stockholders, to each
registered holder of Warrants at his address appearing on the Warrant Register
as of the record date for the determination of the stockholders entitled to such
documents.
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<PAGE>
SECTION 11. NOTICES. All notices, requests and other communications
pursuant to this Agreement shall be in writing and shall be sufficiently given
or made when delivered or mailed by first class mail, postage prepaid, addressed
as follows:
(A) if to the Company:
National Scientific Corporation
4455 East Camelback Road
Suite 5150
Phoenix, Arizona 55018
Attention: President
(B) if to the registered holder of a Warrant, to the address of such
holder as shown in the Warrant Register.
SECTION 12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Warrants in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which shall not be inconsistent with the provisions of the Warrants, or
which shall not adversely affect the interests of the holders of Warrants
(including reducing the Warrant Price or extending the redemption or expiration
date).
SECTION 18. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the registered holders of the Warrants
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 19. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under the laws of the State of Texas and for all purposes shall be
construed in accordance with the laws of said State.
SECTION 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall he
construed to give to any person or corporation other than the Company and the
registered holders of the Warrants any legal or equitable right, remedy or claim
under this Agreement. This Agreement shall be for the sole and exclusive benefit
of the Company and the registered Holders of the Warrants.
SECTION 21. COUNTERPARTS. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute hut one and the
same instrument.
SECTION 22. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the moaning or construction of any of the provisions hereof.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
NATIONAL SCIENTIFIC CORPORATION
By:
------------------------------------
President
By:
------------------------------------
Secretary
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<PAGE>
WARRANT CERTIFICATE NO.__________
CLASS A WARRANT TO PURCHASE SHARES OF COMMON STOCK
NATIONAL SCIENTIFIC CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
This certifies that, for value received ________________________________
the registered holder hereof or assigns (the "Holder"), is entitled to purchase
from NATIONAL SCIENTIFIC CORPORATION, a Texas corporation (the "Company"), at
any time after the date of this Warrant Certificate and before 5:00 p.m.,
Arizona time, on December 31, 2000, at a purchase price of $1.00 (the "Warrant
Price") per share, one hundred thousand (100,000) shares of Common Stack of the
Company (the "Shares"). The number of Shares purchasable upon exercise of each
Warrant evidenced hereby and the Warrant Price per Share shall be subject to
adjustment from time to time as set forth in the Warrant Agreement referred to
below.
The Warrants evidence hereby may be exercised in whole or in part by
presentation of the Warrant Certificate with the Purchase Form duly executed
(with a signature guarantee) and simultaneous payment of the Warrant Price
(subject to adjustment) at the principal office in Phoenix, Arizona. Payment of
such price shall be made at the option of the Holder in cash or by certified
check or bank draft, all as provided in the Warrant Agreement.
The Warrants evidenced hereby are part of a duly authorized issue of Common
Stock Purchase Warrants and are issued under and in accordance with a Warrant
Agreement dated March 15, 1998 and are subject to terms and provisions contained
in such Warrant Agreement, to all of which the Holder of the Warrant Certificate
by acceptance hereof consents. A copy of the Warrant Agreement may be obtained
for inspection by the Holder hereof upon written request to the Company.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
countersigned and issued to the Holder a new Warrant Certificate in respect of
the Shares as to which the Warrants evidenced hereby shall not have been
exercised. This Warrant Certificate may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed (with a
signature guarantee) either separately or in combination with one or more other
Warrants for one or more new Warrants to purchase the same aggregate number of
Shares as here evidenced by the Warrant or Warrants exchanged. No fractional
Shares will be issued upon the exercise of rights to purchase hereunder, but the
Company shall pay the cash value of any fraction upon the exercise of one or
more Warrants. The Warrants evidenced hereby are transferable at the office of
the Company in the manner and subject to the limitations set forth in the
Warrant Agreement.
<PAGE>
The Holder hereof may be treated by the Company all other parsons dealing
with this Warrant Certificate as the absolute owner hereof for all purposes and
as the person entitled to exercise the rights represented hereby, any notice to
the contrary notwithstanding, and until such transfer is entered an such books,
the Company may treat the Holder hereof as the owner for all purposes.
This Warrant Certificate does not entitle the Holder hereof to any of the
rights of a stockholder of the Company.
Dated: NATIONAL SCIENTIFIC CORPORATION
-----------------------
By:
------------------------------------
President
ATTEST:
- -----------------------------
Secretary
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
PURCHASE FORM
National Scientific Corporation
4455 East Camelback Road, Suite El GO
Phoenix, Arizona 85018
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
_________________ Shares of Common Stock provided for therein, and requests that
certificates for such Shares be issued in the name of:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
and, if said number of Shares shall riot be all the Shares purchasable
hereunder. that a new Warrant Certificate for the balance of the Shares
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder or his Assignee as below indicated and delivered to the
address stated below.
Dated:___________________
Name of Holder or Assignee:
___________________________________
(Please Print)
Address:
________________________________________________________________________________
________________________________________________________________________________
Signature:
___________________________________
Note: The above signature must correspond with the name as it appears upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, unless these Warrants
have been assigned.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE>
ASSIGNMENT
(To Be Signed Only Upon Assignment Of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
________________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
the within Warrants, hereby irrevocably constituting and appointing
___________________, Attorney, to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated: ____________________________
___________________________________
Signature of Registered Holder
Note: The signature on this Assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change whatever.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
WARRANT AGREEMENT
NATIONAL SCIENTIFIC CORPORATION
THIS AGREEMENT (the "Agreement"), dated as of 1998, is between NATIONAL
SCIENTIFIC CORPORATION (the "Company") and (the "Holder").
WHEREAS, in conjunction with an offering of up to fifty (50) units (the
("Units"), each Unit consisting of one thousand (1,000) shares of the Company's
convertible preferred stock, par value $0.10 par value, (the "Preferred Stock"),
and one hundred thousand (100,000) Class A Common Stock Purchase Warrants ("A
Warrants or Warrants"), the Company and the Holder desire to enter into this
Agreement governing the terms of the A Warrants.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein set, the parties agree as follows:
SECTION 1. A WARRANTS AND FORM OF A WARRANT CERTIFICATES.
(A) Each A Warrant shall entitle the Holder of the certificate
representing such A Warrant to purchase upon the exercise thereof
one (1) share of Common Stock, subject to the adjustments
provided for in Section 8 hereof, at any time after issuance,
until December 31, 2000 ("A Expiration Date") with respect to the
A Warrants.
(B) The A Warrant certificates shall be in registered form only. The
text of the A Warrant certificate and the form of election to
exercise an A Warrant shall be substantially in the form of the
exhibit attached hereto. Each A Warrant certificate shall be
dated as of the date of issuance (whether upon initial issuance
or upon transfer or exchange), and shall be executed on behalf of
the Company by the manual or facsimile signature of its President
or a Vice President, and attested to by the manual or facsimile
signature of its Secretary or an Assistant Secretary.
SECTION 2. EXERCISE OF A WARRANTS, DURATION AND A WARRANT PRICE. Subject to
the provisions of this Agreement, each registered Holder of one or more A
Warrant certificates shall have the right, which may be exercised as in such A
Warrant certificates expressed, to purchase from the Company (and the Company
shall issue and sell to such registered Holder) the number of shares of Common
Stock to which the A Warrants represented by such certificates are at the time
entitled hereunder.
Each A Warrant not exercised by its A Expiration Date shall become void,
and all rights thereunder and all rights in respect thereof under this Agreement
shall cease on such date.
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A Warrants may be exercised by the surrender of the certificate
representing such A Warrants to the Company, at the office of the Company, with
the subscription farm set forth duly executed and properly endorsed with the
signatures properly guaranteed, and upon payment in full to the Company of the A
Warrant Price (as defined hereinafter) for the number of shares of Common Stock
as to which the A Warrant is exercised. Such A Warrant Price shall be paid in
full in cash, or by certified check of bank draft payable in United States
currency to the order of the Company.
The price per share of the Common Stack at which the A Warrants may be
exercised shall be $1.00 per share with no regard to the bid or ask price of the
stock on, before or after the date the Holder chooses to exercise the A
Warrants. The A Expiration Date will be, as previously stated in Section 1(A),
December 31, 2000.
Subject to the further provisions of this Section 2 and of Section 5
hereof, upon such surrender of A Warrant certificates and payment of the of the
A Warrant Price as aforesaid, the Company, shall issue and cause to be
delivered, with all reasonable dispatch to or upon the written order of the
registered Holder of such A Warrants and in such name or names as such
registered Holder may designate, a certificate or certificates for the number of
securities so purchased upon the exercise of such A Warrants, together with
cash, as provided in Section 9 of this Agreement, in respect of any fraction of
a share or security otherwise issuable upon such surrender. All shares of Common
Stock issued, upon the exercise of A Warrants shall be validly issued, fully
paid and non-assessable.
Certificates representing such securities shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a Holder of record of such securities as of the date of the surrender of
such A Warrants and payment of the A Warrant Price as aforesaid; provided,
however, that is, at the date of surrender of such A Warrants and payment of
such A Warrant Price, the transfer books for the Common Stock or other
securities purchasable upon the exercise of such A Warrants are then exercised
shall he issuable as of the date on which such books shall next be opened and
until such date the Company shall be under no duty to deliver any certificate
for such securities, The rights of purchase represented by each A Warrant
certificate shall be exercisable, at the election of the registered Holders
thereof, either as an entirety or from time to time for part of the number of
securities specified therein and, in the event that any A Warrant certificate is
exercised in respect of less that all of the securities specified therein at any
time prior to the A Expiration Date of the A Warrant certificate, a flew A
Warrant certificate or certificates will be issued to such registered Holder for
the remaining number securities specified in the A Warrant certificate so
surrendered.
SECTION 3. COUNTERSIGNATURE AND RESIGNATION The Company shall maintain
books (the "A Warrant Register) for the registration and the registration of
transfer of the A Warrants. Upon the initial issuance of the A Warrants, the
Company shall issue and register the A Warrants in the names of the respective
Holders thereof. The A Warrant certificates shall be countersigned manually or
by facsimile by an officer of the Company and attested to by an officer of the
Company.
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Prior to due presentment for registration of transfer of any Warrant
certificate the Company may deem and treat the person in whose name such Warrant
certificate shall be registered upon the Warrant Register (the "registered
Holder") as the absolute owner of such Warrant certificate and of each Warrant
represented thereby (notwithstanding any flotation of ownership or other writing
on the Warrant certificate made by anyone other than the Company or the Warrant
Agent), for the purpose of any exercise thereof, of any distribution or notice
to the Holder thereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
SECTION 4. TRANSFER AND EXCHANGE OF WARRANTS. The Company shall register
the transfer, from time to time, of any outstanding Warrant upon the warrant
Register, upon surrender of the certificate evidencing such Warrant for
transfer, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant
certificate representing an equal aggregate number of Warrants shall be issued
to the transferee and the surrendered Warrant certificate shall be canceled by
the Company.
Warrant certificates may he surrendered to the Company together with a
written request for exchange, and thereupon the Company shall issue in exchange
therefor one or more new Warrant certificates as requested by the registered
Holder of the Warrant certificate or certificates so surrendered, representing
an equal aggregate number of Warrants.
SECTION 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of the shares of Common Stock
issuable upon the exercise of Warrants; provided, however, the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates for shares of
Common Stock in a name other than registered Holder of Warrants in respect of
which are issued, and in such case the Company shall not be required to issue or
deliver any for shares of Common Stock or any Warrant until the person
requesting the same has paid the amount of such tax or has established to the
Company's satisfaction that such tax has been paid.
SECTION 6. MUTILATED OR MISSING WARRANTS. in case any of the Warrant
certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue a new Warrant certificate, and THE COMPANY IN EXCHANGE AND
SUBSTITUTION THEREFOR AND UPON CANCELLATION OF THE MUTILATED WARRANT
CERTIFICATE, OR IN LIEU OF AND SUBSTITUTION FOR THE WARRANT CERTIFICATE LOST
STOLEN OR DESTROYED, shall countersign and deliver a new Warrant certificate
representing an equal aggregate number of Warrants, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant certificate and reasonable indemnity, it requested, also satisfactory to
them. Applicants for such substitute Warrant certificates shall also comply with
such other reasonable conditions and pay such reasonable charges as the Company
may prescribe.
SECTION 7. RESERVATION OF COMMON STOCK. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Warrants then outstanding,
and the transfer agent for the Common Stock, and every subsequent transfer agent
for any shares of the Company's capital stock issuable upon the exercise of any
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<PAGE>
of the rights of purchase aforesaid, are hereby irrevocably authorized and
directed at all times to reserve such number of authorized and unissued shares
as shall be requisite for such purpose.
SECTION 8. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 ADJUSTMENTS. The number of shares of Common Stock purchasable upon
the exercise of each Warrant arid the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock or
make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stuck into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common
stock, other securities of the Company, the number of shares of Common
Stock purchasable upon exercise of a Warrant immediately prior thereto
shall be adjusted so that the Holder of a Warrant shall be entitled to
receive the kind and number of shares of Common Stock or other securities
of the Company which such Holder would have owned or would have been
entitled to receive immediately after the happening of any of the events
described above, had the Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto. Any
adjustment made pursuant to this subsection 8.1(a) shall become effective
immediately after the effective date of such event retroactive to the
record date, if any, for such event.
(b) In case the Company shall issue rights, options, Warrants or
convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling them to subscribe for
or purchase Common Stock at a price per share which is lower at the record
date mentioned below than the then Current Market Price (as defined in
Section 9 hereof), the number of shares of Common Stock thereafter
purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of shares of Common Stock theretofore purchasable
upon exercise of a Warrant by a fraction, of which the numerator shall be
the number of shares of Common Stock outstanding immediately prior to the
issuance of such rights, options. Warrants or convertible securities plus
the number of additional shares of Common Stock offered for subscription or
purchase, and of which the denominator shall be the number of shares of
Common Stock outstanding immediately prior to the issuance of such rights,
options, Warrants or convertible securities plus the number of shares which
the aggregate offering price of the total number of shares offered would
purchase at such Current Market Price. Such adjustment shall be made
whenever such rights, options. Warrants or convertible securities are
issued, and shall become effective immediately and retroactive to the
record date for the determination of stockholders entitled to receive such
rights, options, Warrants or convertible securities.
4
<PAGE>
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock, evidences of its indebtedness or assets
(excluding cash dividends or distributions cut of earnings) or rights,
options, Warrants or convertible securities containing the right to
subscribe for or purchase Common Stock (excluding those referred to in
subsection 8.1(b) above), then in each case the number of shares of Common
Stock thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of shares of Common Stock theretofore
purchasable upon exercise of such Warrant by a fraction, of which the
numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market
Price on such date minus the then fair value of the portion of the assets
or evidences of indebtedness so distributed or of such subscription rights,
options, Warrants or convertible securities applicable to one share. Such
adjustment shall be made whenever any such distribution is made and shall
become effective on the date of distribution retroactive to the record date
for the determination of stockholders entitled to receive such
distribution.
(d) No adjustment in the number of shares of Common Stock purchasable
pursuant to the Warrants shall be required unless such adjustment would
require an increase or decrease of at least one percent in the number of
shares of Common Stock then purchasable upon the exercise of the Warrants;
provided, however, that any adjustments which by reason of this subsection
8.1(d) are not required to be made immediately shall be carried forward and
taken into account in any subsequent adjustment.
(e) Whenever the number of shares of Common Stock purchasable upon the
exercise of a Warrant is adjusted as herein provided, the Warrant Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which
the numerator shall he the number of shares of Common Stock purchasable
upon the exercise of such Warrant immediately prior to such adjustment, and
of which the denominator shall be the number of shares of Common Stock so
purchasable immediately thereafter.
8.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section 8.1
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a Warrant or upon the exercise of a
Warrant.
8.3 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Company an
agreement that the registered holders of the Warrants shall have the right
thereafter, upon payment of the Warrant Price in effect immediately prior to
such action, to purchase, upon exercise of each Warrant, the kind and amount of
shares and other securities and property which it would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale or
conveyance had each Warrant been exercised immediately prior to such action. In
the event of a merger described in Section 368(a)(2)(E) of the Internal Revenue
Code of 1986, as amended, in which the Company is the surviving corporation, the
5
<PAGE>
right to purchase shares of Common Stock under the Warrants shall terminate on
the date of such merger and thereupon the Warrants shall become null and void,
but only if the controlling corporation shall agree to substitute for the
Warrants its warrants which entitle the holders thereof to purchase upon this
exercise the kind and amount of shares and other securities and property which
they could have owned or been entitled to receive had the Warrants been
exercised immediately prior to such merger. Any such agreements referred to in
this subsection 8.3 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in section 9
hereof. The provisions of this subsection 8.3 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be required to issue
fractional shares of common Stock on the exercise of a Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this Section 9,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company shall in lieu thereof pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market and flat in the NASDAQ National Market System nor on any
national securities exchange, the average of the per share closing bid prices of
the Common Stock on the thirty (30) consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is traded in the NASDAQ
National Market System or on a national securities exchange, the average for the
thirty (30) consecutive trading days immediately preceding the date in question
of the daily per share closing prices of the Common Stock in the NASDAQ National
Market system or on the principal stock exchange on which it is listed, as the
case may be. For purposes of clause (i) above, if trading in the Common Stock is
not reported by NASDAQ, the bid price referred to in said clause shall be the
lowest bid price as reported by National Quotation Bureau, Incorporated. The
closing price referred to in clause (ii) above shall be the last reported sale
price or, in the case no such reported sale takes place on such day, the average
of the reported closing bid and asked prices, in either case in the NASDAQ
National Market System or on the national securities exchange on which the
Common Stock is then listed.
SECTION 10. RIGHTS AS WARRANTHOLDERS. Nothing contained in this Agreement
or in any of the Warrants shall be construed as conferring upon the holders
thereof, as such, any of the rights of stockholders of the Company, including,
without limitation, the right to receive dividends or other distributions, to
exercise any preemptive rights, to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter. Anything herein to the contrary
notwithstanding, the Company shall cause copies of all financial statements and
reports, proxy statements and other documents as it shall send to its
stockholders to be sent by the same class mail as sent to its stockholders,
postage prepaid, on the date of the mailing to such stockholders, to each
registered holder of Warrants at his address appearing on the Warrant Register
as of the record date for the determination of the stockholders entitled to such
documents.
6
<PAGE>
SECTION 11. NOTICES. All notices, requests and other communications
pursuant to this Agreement shall be in writing and shall be sufficiently given
or made when delivered or mailed by first class mail, postage prepaid, addressed
as follows:
(A) if to the Company:
National Scientific Corporation
4455 East Camelback Road
Suite 5150
Phoenix, Arizona 55018
Attention: President
(B) if to the registered holder of a Warrant, to the address of such
holder as shown in the Warrant Register.
SECTION 12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of
Warrants in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which shall not be inconsistent with the provisions of the Warrants, or
which shall not adversely affect the interests of the holders of Warrants
(including reducing the Warrant Price or extending the redemption or expiration
date).
SECTION 18. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the registered holders of the Warrants
shall bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 19. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under the laws of the State of Texas and for all purposes shall be
construed in accordance with the laws of said State.
SECTION 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall he
construed to give to any person or corporation other than the Company and the
registered holders of the Warrants any legal or equitable right, remedy or claim
under this Agreement. This Agreement shall be for the sole and exclusive benefit
of the Company and the registered Holders of the Warrants.
SECTION 21. COUNTERPARTS. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute hut one and the
same instrument.
SECTION 22. DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the moaning or construction of any of the provisions hereof.
7
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
NATIONAL SCIENTIFIC CORPORATION
By:
------------------------------------
President
By:
------------------------------------
Secretary
8
<PAGE>
WARRANT CERTIFICATE NO.__________
CLASS A WARRANT TO PURCHASE SHARES OF COMMON STOCK
NATIONAL SCIENTIFIC CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
This certifies that, for value received ________________________________
the registered holder hereof or assigns (the "Holder"), is entitled to purchase
from NATIONAL SCIENTIFIC CORPORATION, a Texas corporation (the "Company"), at
any time after the date of this Warrant Certificate and before 5:00 p.m.,
Arizona time, on December 31, 2001, at a purchase price of one dollar and fifty
cents ($1.50) (the "Warrant Price") per share, fifty thousand (50,000) shares of
Common Stack of the Company (the "Shares"). The number of Shares purchasable
upon exercise of each Warrant evidenced hereby and the Warrant Price per Share
shall be subject to adjustment from time to time as set forth in the Warrant
Agreement referred to below.
The Warrants evidence hereby may be exercised in whole or in part by
presentation of the Warrant Certificate with the Purchase Form duly executed
(with a signature guarantee) and simultaneous payment of the Warrant Price
(subject to adjustment) at the principal office in Phoenix, Arizona. Payment of
such price shall be made at the option of the Holder in cash or by certified
check or bank draft, all as provided in the Warrant Agreement.
The Warrants evidenced hereby are part of a duly authorized issue of Common
Stock Purchase Warrants and are issued under and in accordance with a Warrant
Agreement dated __________________________, 1999 and are subject to terms and
provisions contained in such Warrant Agreement, to all of which the Holder of
the Warrant Certificate by acceptance hereof consents. A copy of the Warrant
Agreement may be obtained for inspection by the Holder hereof upon written
request to the Company.
Upon any partial exercise of the Warrants evidenced hereby, there shall be
countersigned and issued to the Holder a new Warrant Certificate in respect of
the Shares as to which the Warrants evidenced hereby shall not have been
exercised. This Warrant Certificate may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed (with a
signature guarantee) either separately or in combination with one or more other
Warrants for one or more new Warrants to purchase the same aggregate number of
Shares as here evidenced by the Warrant or Warrants exchanged. No fractional
Shares will be issued upon the exercise of rights to purchase hereunder, but the
Company shall pay the cash value of any fraction upon the exercise of one or
more Warrants. The Warrants evidenced hereby are transferable at the office of
the Company in the manner and subject to the limitations set forth in the
Warrant Agreement.
<PAGE>
The Holder hereof may be treated by the Company all other parsons dealing
with this Warrant Certificate as the absolute owner hereof for all purposes and
as the person entitled to exercise the rights represented hereby, any notice to
the contrary notwithstanding, and until such transfer is entered an such books,
the Company may treat the Holder hereof as the owner for all purposes.
This Warrant Certificate does not entitle the Holder hereof to any of the
rights of a stockholder of the Company.
Dated: NATIONAL SCIENTIFIC CORPORATION
-----------------------
By:
------------------------------------
President
ATTEST:
- -----------------------------
Secretary
<PAGE>
NATIONAL SCIENTIFIC CORPORATION
PURCHASE FORM
National Scientific Corporation
4455 East Camelback Road, Suite El GO
Phoenix, Arizona 85018
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
______________ Shares of Common Stock provided for therein, and requests that
certificates for such Shares be issued in the name of:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
and, if said number of Shares shall riot be all the Shares purchasable
hereunder. that a new Warrant Certificate for the balance of the Shares
purchasable under the within Warrant Certificate be registered in the name of
the undersigned Holder or his Assignee as below indicated and delivered to the
address stated below.
Dated: __________________
Name of Holder or Assignee:
___________________________________
(Please Print)
Address:
________________________________________________________________________________
________________________________________________________________________________
Signature:
___________________________________
Note: The above signature must correspond with the name as it appears upon the
face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever, unless these Warrants
have been assigned.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE>
ASSIGNMENT
(To Be Signed Only Upon Assignment Of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto:
________________________________________________________________________________
________________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
the within Warrants, hereby irrevocably constituting and appointing
_____________________, Attorney, to transfer said Warrants on the books of the
Company, with full power of substitution in the premises.
Dated: ____________________________
___________________________________
Signature of Registered Holder
Note: The signature on this Assignment must correspond with the name as it
appears upon the face of the within Warrant Certificate in every
particular, without alteration or enlargement or any change whatever.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
TARGUN PROPERTIES, INC.
LEASE & SERVICE AGREEMENT
This agreement is made on this 21st day of August 1998 between TARGUN
PROPERTIES, INC., an Arizona Corporation (hereinafter referred to as "Lessor"),
and NATIONAL SCIENTIFIC CORPORATION. an Arizona Corporation, (hereinafter
referred to as "Lessee"). Lessor has entered into a lease for the space
described below:
Suite E-160, Offices # 23, 24, & 25
4455 B. Camelback Rd.
Phoenix, Arizona 85018
Lessee desires to lease from Lessor a certain portion of Suite E-160 for the
purpose of conducting Lessee's business together with the fights in common to
the "Common Areas" of the Suite.
In consideration of the covenants and promises each to the other made herein,
the parties hereto agree as follows:
1. PREMISES. In consideration of the rents and covenants to be paid and
performed by Lessee, Lessor does hereby lease to Lessee, and Lessee does hereby
hire from Lessor, upon the terms and conditions hereinafter set forth, Office
Numbers 23, 24, & 25 within the Suite E-160 (The Park Executive Suites) located
at 4455 Camelback Rd. (hereinafter the "Premises"). All of the property at 4455
E. Camelback Rd., Phoenix, Arizona 85018, including but not limited to, the
buildings, equipment moms, grounds, walls, parking areas and driveways is
hereinafter referred to as The Suites.
A. An exclusive right to occupy offices numbered 23. 24, & 25 . Said
office will be occupied by no more than four (4) persons. Many
additional persons occupy the office, Lessee shall pay to Lessor an
additional (Fifty dollars) $50.00 per month for each additional person
who occupies the office.
B. A non-exclusive light in common with other Lessees, their associates,
and other parties contracting with Lessor to the use of services
offered by Lessor and to the use of the common areas of the Premises,
including but not limited to the reception area, amenities, copy
machine room, conference room, and corridors, as provided by Lessor on
this floor in the Suite.
2. TERM.
A. The term shall commence on September 1. 1998 and terminate on August
31 1999 subject to the provisions hereinafter provided.
B. If the Premises are not ready for occupancy on the commencement date
of the Lease, this Lease shall remain in full force and effect. Lessee
should physically inspect the Premises to verify that the Premises
will be ready on any promised date. Lessor shall not be liable to
Lessee for any loss or damages resulting from the Premises not being
ready for occupancy on the commencement date of this Lease, and the
term (or any rent increase date herein) shall not be extended, but in
such event all rent shall be abated during the period between the
commencement of the said Term and the time when the Premises are
available to Lessee, the term of the Lease shall commence, and rent
shall commence without any deduction or offset, on the date Lessee
moves into the leased space or has a telephone installed, whichever
occurs first.
C. Either party may terminate this Lease at the expiration of the term
set forth herein. Lessee must give thirty (30) days written notice to
Lessor of Lessee's intent to terminate the Lease at the expiration of
the term. If Lessee vacates said premises before the expiration date,
Lessee will be held responsible to Lessor for all rent owed until
specified termination date. If Lessee does not renew Lease or sign a
new lease prior to the expiration of Lease, Lessor reserves the right
to immediately terminate rental and serve an immediate eviction
notice. Also, if Lessee fails to give thirty (30) day written notice
of his intent to vacate the premises at the end of the term, Lessee
will automatically be considered a month-to-month tenant and will be
responsible for the current market rental rate of the premises decided
at Lessor's discretion, until such time that Lessee does give thirty
(30) days written notice of Lessees Intent to vacate premises.
3. RENT. Lessee agrees to pay to lessor (as rental for the Premises described
in Paragraph 1 hereof the following monthly sum of:
<PAGE>
$2400.00 Base Rent $ 45.60 State Rental Tax
$ Telephone Rent $ Other
$ Telephone Answering $ Other
$ Furniture Rental $ 90.00 Covered Parking
$2,535.60 TOTAL MONTHLY RENTAL
All rents shall be due and payable on the first of each month. Rents become
delinquent after the 5th of each month at which time Lessee is considered in
default of Lease and is responsible for any and all penalties set forth herein
as described in paragraph l2of Lease.
4. SECURITY DEPOSITS Upon execution of this Lease by Lessee, Lessor will
retain a security deposit in the amount of $750.00, $300.00 of which is
non-refundable.
A. Lessee's security deposit represents a bond on the part of the Lessee
for the faithful performance of the provisions of tins Lease. The
security deposit will not be interest bearing to Lessee and may be
commingled by Lessor with other funds of Lessor. The security deposit
will not and shall not be applied as rent by Lessor or Lessee, and
shall be retained by Lessor during Lessee's tenancy. If Lessee remains
in the Premises after the expiration date of the Lease, the security
deposit will be retained by Lessor until Lessee's security deposit as
is reasonably necessary to remedy and defaults of Lessee in the
payment of rent to repair damages to the Premises caused by the
Lessee, and the parties expressly agree that the security deposit is
made for all the aforesaid specific purposes. If the space rented has
been previously occupied, Lessee acknowledges inspection of the
carpeting, flooring, walls, wall coverings, ceiling, and door of the
leased premises and acknowledges that there are no holes, stains or
other damage thereto if not specified in detail at the bottom of the
last page of this Lease. II Lessee's space is not completed or
available for inspection, Lessee has ten (10) days after the
commencement date of this Lease to send a letter via Certified Mail to
lessor identifying any holes, stains, or other damages. If Lessee has
paid all of the rent due under this Lease, Lessor shall return to
Lessee the entire security deposit (less $100.00 for cleaning and
painting and any offsets for damages) for each suite occupied by
Lessee after sixty (60) days after Lessee moves out of the Premises.
II any law exists or is enacted which contradicts any provision of
these security deposit provisions, Lessor is not liable to Lessee for
any damages unless Lessee sends Lessor by Certified Mail a copy of the
applicable case of code and Lessor fails to cure same within seven (7)
days.
5. MASTER LEASE. Lessee recognizes that there is a Master Lease of which
Lessee's office (s) is a portion, and Lessee shall have no greater rights to the
use and occupancy of the Premises than Lessor has with the Building under
Lessor's Master Lease. Lessee is bound to Lessor in the same manner as Lessor is
bound to the Building with respect to all standard lease provisions, such as
eminent domain, destruction of building, etc.. as well as the rules and
regulations of the Building. Lessee agrees to release and forever hold the
Lessor harmless from any claim of damages, liabilities or losses alleged or
proven to be due, in whole or in part, to any dispute which might arise between
Lessor and Landlord under the Master Lease. In the event of termination of the
Master Lease, Lessee shall, at the option of Lessor's Landlord, attorney to
Lessor's Landlord and recognize Lessor's Landlord as Lessor under this Sublease.
This Paragraph does not obligate Lessee in any way to the Building or to anyone
else, for anyone else's rent, or any payment whatever, except expressly set
forth in this Agreement. Although Lessor's rent may be increased under the
Master Lease if taxes, utilities or maintenance costs increase, Lessee's rent
will not be increased during the term of this Lease (except otherwise provided
in Paragraph 3 hereof).
All reference to Lessee in the Agreement is to mean Sub-Lessee; reference
to Lessor is to mean Sub-Lessor; and reference to Lease is to mean Sub-Lease.
6. IMPROVEMENTS
A. Lessee may not make any improvements within the office leased herein
without the written permission of Lessor. Lessee shall pay for any
such improvements. Lessee may remove any improvements paid for by
Lessee provided that Lessee repairs any holes, gaps or other damage to
walls, ceiling, flooring or their coverings. Lessee will remove any
improvements (other than additional, normal height electrical outlets)
installed by Lessee and restore the Premises to the condition prior to
Lessee's occupancy if the next tenant in that space objects to
Lessee's improvements. Lessee may not remove any improvement for which
Lessor contributed payment without Lessor's prior written consent.
During the restoration period, Lessee shall pay rent to Lessor as
provided herein as if said space were otherwise occupied by Lessee.
B. If Lessee requires any additional air conditioning or electrical
outlets of separate circuits for a computer or other office equipment
2
<PAGE>
Lessee will be responsible for the entire cost thereof. Lessee will order all
additional air conditioning or electrical work through, or with the approval of,
the Building Manager.
7. REPAIRS. The Building which leases the Premises to Lessor is responsible
for construction of the Premises and repairs to elevator, air conditioning,
electrical, plumbing and structural supports under the Master Lease. Lessor is
not liable to Lessee by reason of any defect inadequacy, or insufficiency in
sane. Lessee may not deduct or offset any amount from rent due herein because of
any problem regarding construction, repairs or lack thereof. Lessor will
coordinate any repair or complaint of Lessee; however, any claim by Lessee with
respect thereto shall be made solely against the Building and Lessor hereby
assigns to Lessee, solely for the purpose of making and prosecuting any claim,
repairs for dangerous conditions existing in the common areas within the Suite.
Lessee is responsible for, and shall indemnify and hold Lessor harmless from and
against, any damage to persons or property caused by Lessee, or Lessee's
employees, agents, clients, guests or invitees. Lessee is not responsible for
repairing wall holes from normal sized nails used to hang pictures.
8. UTILITIES, SERVICES. MAINTENANCE. AND CONSTRUCTION. Under Lessor's Master
Lease, the Building provides utilities, services janitorial, heat and air
conditioning) , and maintenance. Janitorial services include carpet vacuuming,
but not shampooing. Heat and air conditioning is provided during genrally
recognized business days and hours; however, Lessee will have access to the
Premises 24 hours a day,7 days a week, subject to the Buildints rules requiring
proper identification after normal business hours. Lessor is not liable to
Lessee by reason of any failure to provide, or the inadequacy of utilities,
janitorial, heat or air conditioning services or maintenance. Lessor is not
responsible for any negligence of the Building's agents, servants, or employees.
Lessee may not deduct or offset any amount from rent due herein because of any
problem regarding utilities, heat, air conditioning, janitorial services,
maintenance services or defective construction of Premises. Upon request by
Lessee, Lessor will write the Building regarding any complaint about maintenance
or construction however, any claim by Lessee with respect thereto shall be made
by Lessee directly to the Building, under the Master Lease. Lessor is not
responsible for maintaining, repairing, or cleaning the floor coverings, wail
covering or venetian blinds within Lessee's Premises, other than normal
janitorial service provided by the Building.
A. EXTRAORDINARY CONSUMPTION OF SERVICES. Lessee shall not without the
written consent of Lessor, use any apparatus or device in the
Premises, other than a reasonable number of small business machines,
that will in any way increase the amount of electricity or water
usually furnished or supplied for use of the Premises as general
office space, or that will materially affect the temperature otherwise
maintained by the air conditioning or heating system. In Lessor's sole
discretion, Lessee agrees to pay promptly upon demand by Lessor all
additional water or electric current consumed, plus any additional
expenses incurred in keeping track of said consumption, including the
cost of installing separate meters in and to the Leased Premises if
Lessor deems it necessary.
9. TELEPHONE AND RECEPTION. Lessor agrees to provide telephone answering for
one line and reception service as reasonably required by Lessee from 8:00 a.m.
to 5:00 p.m., Monday through Friday, nationally recognized holidays excepted.
Additional lines will be answered at a cost of $25.00 per month per line. Lessee
shall be responsible for its own telephone expense. and the installation and
monthly service charges, if any, from the telephone company by reason of
Lessee's lines being connected to the reception desk and telephone room
consoles, whether billed to Lessor or Lessee. Any telephone expense billed to
Lessor (including any telephone company double charge) shall be paid or
reimbursed by Lessee to Lessor.
If the telephone company does not install Lessee's phone on or before the
commencement date of this Lease, the commencement date shall not be extended,
nor shall rent be abated. Lessor will assist Lessee in ordering lines and
equipment through Lessor's interconnect telephone company; however, it is
Lessee's responsibility to make certain lines are installed in Lessee's office
and to Lessor' central call director in a timely fashion.
Lessee recognizes that telephone answering and reception services are never
perfect and that even the best receptionists and telephone operators make
mistakes. Lessor strives to provide excellent telephone answering and reception
services; however, reception services are functions that are under the control
of Lessee in that Lessee may perform either or both of these functions directly
through Lessee's employees Lessee hereby agrees to assume the risk of negligent
(passive and/or active) performance of telephone answering and/or reception
service. Lessee agrees that Lessor shall not be liable for any loss of business
or damage of any sort occurring through or in connection with, or incidental to
the furnishing of, or the failure to furnish, telephone answering or reception
service. Further, Lessee agrees to indemnify, release and hold Lessor harmless
from any loss, damage, claim or liability arising out of or in connection with
any telephone answering and/or reception service provided or not provided by
Lessor's employees to Lessee or to any caller, visitor or associate of Lessee
Lessor shall not be liable for any loss of business or damages of any sort for
authorizing or permitting the telephone company to disconnect Lessee's telephone
service if Lessee has not paid its telephone bill.
Lessor acknowledges that Lessee's separate number connected to the central
call director belongs to Lessee. If, upon termination of this Lease, the
telephone company requires Lessor's signature to assign said telephone number to
Lessee, Lessee may sign Lessor's name to the telephone company form.
3
<PAGE>
Lessee provides open message/mail slots for all tenants. Lessee
acknowledges that Lessor is not responsible for loss or theft of messages or
mail.
Upon termination of this Lease, Lessor will write on all mail "Moved-Please
Forward to Sender" and return such mail to the post office. Lessor win not store
mail nor place a forwarding address on it unless Lessee pays the then-prevailing
charge for said service.
10. PARKING. Lessee may have monthly parking in the Building's parking
facilities, if any, according to the Building's rules, regulations and rates.
11. ANIMALS AND VEHICLES. Lessee will not bring, nor pennit any of its visitors
to bring, any animal (except seeing-eye dog), bicycle or other vehicle (except
for a wheelchair) into the Suite.
12. DEFAULT, REMEDIES
A. By Lessee. Lessee will be in default under the Lease if any of the
following occurs:
1. If Lessee falls to pay the rent or make any other payment
required by the Lease within three (3) working days after Lessor
sends Lessee a written notice or demand for payment.
2. If on three or more occasions in any twelve month period Lessor
does not receive either Lessee's regular monthly payment of rent
and other regularly recurring charges on or before the first
business day of the month or any other payment on or before the
date it is due.
3. If Lessee assigns the Lease or mortgages its interest in the
Lease or sublets any part of the Premises.
4. If Lessee abandons the Premises, or ceases to operate its
business on the Premises, or becomes bankrupt or insolvent, or
makes any general assignment of all or a substantial part of its
property for the benefit of creditors, or if a receiver is
appointed to operate Lessee's business or to take possession of
all or a substantial part of Lessees property.
5. If Lessee fails to maintain the insurance as required by the
Lease.
6. If Lessee breaches any other provision of the Lease and fails to
cure the breach within fifteen (15) days after Lessor sends
written notice of the breach, or, if the breach cannot be cured
within fifteen days, then if Lessee does not proceed with
reasonable diligence to cure the breach within such additional
time as may be reasonably necessary under the circumstances.
7. If Lessee is disruptive and/or uses obscenities or vulgar
language so as to disturb any of the other tenants or Lessor's
employees.
B. Lessor's Remedies, if Lessee is in default then Lessor may take any of the
following actions:
1. Fees.
a. if rent and monthly service charges have not been received by the
5th of the month, a late charge of $30.00 will be charged.
b. if rent or monthly service charges have not been received by the
6th of the month, an additional late charge of $10.00 per day, or ten
percent (10%) of the total monthly rental, whichever is greater, shall
be charged until the rent and service charges, including the late
charge, are paid in full.
c. if one or more checks are dishonored by Lessee's bank in a twelve
(12) month period, Lessor may require, during the balance of the
Lessee's tenancy, payment by cashier's check or money order. Lessee's
failure to comply therewith will constitute a material breach and
permit Lessor to terminate this Lease.
d. If a check is dishonored by Lesee's bank, a $50 returned check fee
will be charged.
4
<PAGE>
e. In the event that Lessee becomes delinquent in the payment or rent,
or is unable to meet the monthly rental obligation on a timely basis
requiring eviction, require cleaning and/or repairs at the expense of
Lessor, Lessee agrees to pay all collection agency fees that are
required for collection of Lessee's. debt.
2. RE-ENTRY AND REPOSSESSION. Lessor may re-enter and take possession of
all or any part of the Premises and remove Lessee and any person claiming under
Lessee from the Premises, and without committing a trespass or becoming liable
for any loss or damage that may be occasioned thereby. Lessor may also change
the locks to the Premises without notice at Lessee's expense. Re-entry and
repossession of the Premises will not by themselves terminate the Lease.
3. REMOVAL, STORAGE AND SALE OF PROPERTY. Lessor may remove any property,
including fixtures, from the Premises and store the same at Lessee's expense in
a warehouse or any other location, or Lessor may lease the property on the
Premises pending sale or other disposition. If Lessor leaves the property on the
Premises or stores it at another location owned or controlled by Lessor, then
Lessor may charge Lessee a reasonable fee for storing and handling the property
comparable to what Lessor would have had to pay to a third party for such
services. Lessor will not be liable under any circumstances to Lessee or to
anyone else for any damage to the property. Lessor shall proceed to sell
Lessee's property in accordance with Arizona law.
4. RELETTING THE PREMISES. Lessor may relet the Premises at whatever rent
and on whatever terms and conditions it deems advisable. The term of any new
Lease may be shorter or longer than the remaining term of this Lease. In
reletting the Premises, Lessor may make any alterations or repairs to the
Premises it feels are necessary or desirable; may subdivide the Premises into
more than one unit and lease each portion separately; may sell Lessee's
improvements, fixtures and other property located an the Premises to the new
tenant, or include such improvements, fixtures and property as part of the
Premises without additional cost may advertise the Premises for sale or lease;
may hire broken or other agents; and, may do anything else it deems necessary or
helpful in reletting the Premises. Lessee will be liable to Lessor for all costs
and expenses of the reletting including but not limited to rental concessions to
the new tenant, broker's commissions and tenant improvements, and will remain
liable for the rent and all other charges arising under the Lease, less any
income received from the new tenant, unless the Lease is terminated as set forth
below.
5. TERMINATION OF LEASE. Lessor may terminate the Lease at any time after
Lessee defaults by sending a written notice to Lessee expressly stating that the
Lease is being terminated. Termination will be effective on the date of the
notice or on any other date set forth in the notice. Until Lessor sends Lessee
such a notice, the Lease will remain in full force and effect, and Lessee will
remain liable for paying the rent and other charges that come due under the
Lease and for performing all other terms and conditions of the Lease. No other
action taken by Lessor, including repossession of the Premises, removing or
selling Lessee's separate property, reletting the Premises, or filing suit for
possession or for damages, will terminate the Lease or release Lessee from its
continuing liability for complying with its terms and conditions.
6. DAMAGES. Lessor may recover from Lessee all costs and expenses Lessor
incurs as a direct or indirect consequence of Lessee's breach, including the
cost of storing and selling Lessee's property, reletting the Premises, and
bringing suit against Lessee for possession or damages. If Lessor made or paid
for any improvements to the Premises, or granted Lessee any improvement
allowance or credit against rent for Lessee's improvements, then Lessor shall
also be entitled to recover the unamortized portion of the cost of such
improvements or the amount of such allowance or credit determined by multiplying
the total amount of such cost or allowance or credit by a fraction, the
denominator of which is the total number of months of the initial lease term and
the numerator of which is the number of months of the term remaining at the time
of Lessee's default. Also, if the Lease provides for any month during which no
rent or a reduced rent is payable, or for any other rent concession to Lessee,
then, upon default, Lessee shall become liable for the full amount of the
monthly base rent, plus applicable taxes, for such months, and Lessor shall be
entitles to recover as additional rent the amount that would have payable by
Lessee for such months if the monthly base rent provided for had been payable
throughout the entire term of the Lease. Unless Lessor terminates the Lease,
Lessee will also remain liable for any difference between the rent and other
charges called for by the Lease and the rent and other charges collected by
Lessor from any new tenant For any month in which Lessor collects less from a
successor tenant than is payable under this Lease, Lessor may demand that Lessee
immediately make up the difference, and Lessor may bring suit against Lessee if
Lessee fails to do so. If Lessor does terminate the Lease, then Lessee will no
longer be liable on a continuing monthly basis for the rent and other charges
that would have become due under the Lease thereafter, but Lessee will remain
liable for all sums accrued under the Lease to the date of termination, as well
as for all costs and expenses incurred by Lessor, and any other damages
sustained by Lessor, as a consequence of Lessee's breach. Also, Lessor may
recover from Lessee the difference between the present value at the date of
termination of the rent payable under law or in ui for breach of contract,
damages or other appropriate relief, The rights and remedies described herein
are cumulative, not exclusive, and Lessors exercise of any one right or remedy
will not preclude the simultaneous or subsequent exercise of any other right or
remedy.
13. INDEMNIFICATION OF LESSOR; INSURANCE. Lessor shall not be liable or
answerable to Lessee or any other person, firm or corporation for any injury or
damage resulting from the condition, or any defect in, the Premises. Lessee
agrees to indemnify Lessor against. and hold Lessor and the Premises and
Building free and harmless from any and all penalties, costs, expenses
(including attorney's fees), claims, demands and causes of action arising out of
or in connection with (a) any accident or other occurrence in or on the
5
<PAGE>
facilities (including, without limiting the generality of the term "facilities",
stairways, passageways or hallways), the use of which Lessee may have in
conjunction with other tenants of the Building, which such injury or damage
shall be caused in part or in whole by the act, neglect, fault or omission of
any duty with respect to the same by Lessee, its agents, servants, employees,
invitees. permittees, customers, clients or guest, (b) the condition of, or and
condition of, or any defect in, Lessee's fixtures or equipment or any part
thereof, (c) the use or occupancy of the Premises by Lessee or any tenant of
Lessee, or (d) any breach of this Lease by Lessee. Lessor is not liable foray
lost or stolen items in the possession of Lessee's office.
Lessee agrees to and shall at its own cost and expense procure and maintain
during the entire Lease Term and any extensions thereof comprehensive public
liability insurance covering the Premises and their surrounding areas and naming
Lessor as an additional Insured. The liability coverage tinder such insurance
shall not be less than Five hundred Thousand Dollars ($500,000) for i4my or
death of one person in any one accident or occurrence; One Million Dollars
($1,000,000) for injury or death of more than one person m any one accident or
occurrence; and One Hundred Thousand Dollars ($100,000) for property damage. The
amounts of insurance coverage stated herein may be reduced by mutual agreement
of the parties. Any such reduction must be stated In writing and executed by the
parties. Lessee shall provide Lessor with certificates of such insurance
evidencing Lessee's compliance. All policies of insurance shall also provide
that such insurance will not be canceled, except after ten (10) days written
notice to Lessor The original of all policies shall remain in the possession of
the Lessee, provided however, that the Lessor shall be issued copies by a
responsible company or companies authorized to do business in the State of
Arizona. In no event shall the limits of said policies be considered as limiting
the liability of Lessee to Lessor under the first section of this Paragraph 13.
14. USE OF PREMISES. Lessee shall not do or permit anything to be done which
will invalidate or increase the cost of any fire, extended coverage or any other
insurance policy covering the Building and/or property located therein.
Lessee shall not do or permit anything to be done in or about the Premises
which will in any way obstruct or interfere with the rights of other tenants or
occupants of the floor, or injure or annoy them, or use or allow the Premises to
be sued for any improper, immoral, unlawful or objectionable purpose, nor shall
Lessee cause, maintain or permit any nuisance in, on or about the Premises. This
prohibition includes, but is not limited to. loud music. other loud noises,
burning incense or other offensive or objectionable odors.
Lessee may use and occupy the leased Premises for general office use and
for no other business or purpose without written consent of Lessor. Lessee
shall, at its own expense, perform and fully satisfy all laws, statutes, and
regulations which may relate to or affect the occupancy of the leased Premises
or any governmental authorities having jurisdiction over the subject Premises.
15. KEYS. Lessor will supply one (i) key to the door of each of office- Lessee
will pay the Building's prevailing charge for elevator keys, security cards or
keys to enter the building after normal business hours, or additional office
keys. Lessor is not responsible for changing any lock, If the master key kept by
Lessor's receptionist is stolen, lost or misplaced, Lessor is not responsible
for changing Lessee's locks. Lessee understands that Lessor is not liable for
thefts and Lessee may install a dead bolt lock on or change the tumbler to
Lessee's office door (s) upon written approval of Lessor; in which event Lessee
must give a copy of the key to Lessor to be used in emergencies and for
maintenance purposes. Lessee agrees to return all keys to Lessor immediately
upon vacating its office. Failure to return all keys immediately will result in
a charge of Lessee for changing the locks, which will be an amount not less that
Twenty-five Dollars ($25). Lessee agrees to pay this charge within ten (10) days
of request by Lessor.
16. ENTRY BY LESSOR. Lessor shall have the right to enter the Premises at any
time to inspect the same or to cure any default (including a breach of the
Building's rules and regulations), to supply any service to be provided by
Lessor hereunder, to submit the Premises to prospective purchaser, tenants or
mortgagees. to post notices of non-responsibility, and to alter, improve or
repair the Premises and any portion of the building, without abatement of rent,
necessary structures where reasonably required by the character of the work to
be performed, always providing that the business of Lessee shall not be
interfered with unreasonably. Lessee hereby waives any claim for damages for any
injury, inconvenience or interference with Lessee's business, any loss of
occupancy or quiet enjoyment of the Premises, and any other loss occasioned by
Lessor's entry for any of the aforesaid purposed.
For each of the aforesaid purposes, Lessor shall at all times have and
retain a key with which to unlock all of the doors upon the Premises, excluding
Lessee's vaults, and Lessor shall have the right to use any and all means to
open said doors in an emergency in order to obtain entry to the Premises, and
any entry to the Premises obtained by Lessor shall not under any circumstances
constitute forcible or unlawful entry into or a detainer of the Premises or an
eviction of Lessee from the Premises or any portion therefor. Lessor shall not
be liable for the consequences of admitting by passkey, or refusing to admit to
the Premises, Lessee or any agent or employee of Lessee.
17. LESSOR'S RIGHT TO CURE DEFAULTS. All convents and agreements to be
performed by Lessee under any of the terms of the Lease shall be at its sole
cost and expense and. except as otherwise specifically provided herein, without
any abatement of rent. If Lessee shall fall to pay any sum of money other than
rent required to be paid by it hereunder or shall fail to perform any other act
on its part to be performed hereunder, Lessor may but shall not be obligated so
to do, and without waiving any rights of Lessor or releasing Lessee from any
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<PAGE>
obligations of Lessee hereunder, make such payment or perform such other ad. All
sums so paid or expenses incurred by Lessor and all necessary incidental costs
together with interest thereon at the rate of eighteen percent (18%) per annum
from the date of such payment by Lessor shall be considered as rent owing
hereunder and shall be payable to Lessor on demand or, at the option of Lessor,
may be added to any rent then due or thereafter becoming due under this Lease.
In addition. Lessor shall have the same Night and remedies in the event of the
nonpayment thereof be Lessee as in the case of default by lessee in the payment
of any rent hereunder.
18. DELAYS. DEFAULT BY LESSOR. Lessor shall not be responsible for any delay or
failure In the observance or performances of any term or condition of this Lease
to be observed or performed by Lessor to the extent that such delay results from
action or order of governmental authorities; civil commotions; strikes, fires,
ads of God or the public enemy; act or default of any Lessee in the Building,
inability to procure labor, material, fuel, electricity, or other forms of
energy; or any other cause beyond the reasonable control of Lessor, whether or
not similar to the matters herein specifically enumerated. Any delay shall
extend by like time any period or performance by Lessor and shall not be deemed
a breach of, or failure to perform, this Lease or any provisions thereof.
In the event of any default under this Lease by Lessor. Lessee, before
exercising any rights that it may have at law to cancel this Lease, shall have
given notice of such default to Lessor and shall have offered Lessor a
reasonable opportunity to correct and cure the default, Lessee also agrees to
give the holders of any mortgages or deeds of trust (mortgages), by registered
mail, a copy of any notice of default served upon Lessor, provided that prior to
such notice Lessee has been notified in writing (by way of Noticed Assignment of
Rents and Leases, or otherwise) of the addresses of such mortgagees. Lessee
further agrees that If Lessor shall have failed to cure such default within the
aforesaid time limit, then the mortgagees shall have an additional thirty (30)
days within which to one such default or if such default cannot be cured within
that time, then such additional time as may be necessary if within such thirty
(30) days any mortgagees has commenced and is diligently pursuing the remedies
necessary to cure such default (including but not limited to commencement of
foreclosure proceedings if necessary to effect such cure), in which event this
Lease shall not be terminated while such remedies are being so diligently
pursued.
19. NOTICE TO LESSOR OR LESSEE. All notices required or desired to be given
under this Lease must be in writing and shall be personally given or delivered
by certified or registered mail addressed to the Lessee at the address of the
Premises and to the Lessor at the address of the Suite in which the Premises are
located. Personal delivery to the floor receptionist does not constitute notice
to either Lessor or Lessee. Either party may, by written notice to the other,
specify a different address for notice purposes
20. TENANT HOLDOVER. In the event that Lessee, without the written consent of
Lessor shall bold over the expiration of the term of this Lease, then Lessee
hereby waives all notice to quit and agrees to pay Lessor, for the period that
the Lessee is in possession after the expiration of this Lease, a monthly rental
which is twice the total monthly rental payable pursuant to Paragraph 3 of this
Lease, together with all damages sustained by Lessor on account of such holding
over. If Lessee occupies any part of the Premises for any portion of any
calendar month, Lessee will be liable for rent for the full calendar month.
Lessee expressly agrees to hold Lessor harmless for all loss and damages. direct
or consequential, which Lessor may suffer in defense of claims by other parties
against Lessor arising out of the holding over by Lessee, Including without
limitation, attorney's fees which may be incurred by Lessor in defense of such
claims. The foregoing provision shall not service as permission for Lessee to
hold over nor serve to extend the term of this Lease. Acceptance of rent by the
Lessor subsequent to the expiration of the term shall not constitute consent to
any holding oven
21. TRANSFER OF LESSORS INTEREST. In the event Lessor transfers its
reversionary interest in the Premises (other than a transfer for security
purposes only), Lessor shall be relieved of all obligations accruing hereunder
after the effective date of such transfer, including, but not limited to, the
return of security deposits or other funds held by Lessor, provided that such
obligations have been expressly assumed in writing by the transferee, and Lessee
agreed to attorn to the transferee.
Lessee agrees at any time and from time to time at the request of Lessor,
to execute, acknowledge and deliver to Lessor within ten (10) days from the date
of said request, a statement in writing certifying that this Lease is unmodified
and in full and effect (or if there have been modifications). and the dates to
which the fixed rent and other charges have been paid in advance, if any, it
being intended that any such statement delivered pursuant to this paragraph may
be relied upon by any prospective purchaser, mortgagee or assignee of any
mortgage of the Premises.
22. RETURN OF POSSESSION. Lessee shall vacate the leased Premises in good order
and repair in which such property was at the commencement of this Lease,
ordinary wear and tear excepted. Lessee shall remove all its property no later
than 5:00 pm on the day upon which this Lease or any extension thereof ends
whether upon notice or by holdover or otherwise. Lessor shall have the same
rights to enforce this covenant by ejectment and for damages or otherwise as for
the breach of any other conditional therein, and remove from the leased Premises
all property, materials or equipment Installed by Lessee, provided that such
property is removed without injury of the leased Premises.
23. CONFERENCE ROOM. Lessee may use the conference mom(s) on a reserved basis
or without reservation If not previously reserved, Lessee will not be allowed to
request any standing or permanent reservation of the conference room(s). Lessee
will pay the then-current rate for conference morn usage over five (5) hours per
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calendar month per office leased. Any use of the conference room(s) by Lessee's
visitors will be considered to be use by Lessee, whether or not Lessee is
present at the lime of such use, and Lessee will be responsible for any charges
incurred for such use.
24. LESSOR'S EMPLOYEES. Lessee acknowledges that Lessor expends substantial
amounts of money and effort to acquire, train and retain employees for the
services provided to Lessee, including employment agency and training costs.
Lessee agrees that during the term of, or any extension or renewal of, the Lease
and for a period on one (i) year thereafter, Lessee will not hire or attempt to
hire In any capacity whatever, full-time, part-time or on a work for hire basis,
on behalf of itself or any person or entity by whom Lessee (if an individual) is
employed, any employee of Lessor. This prohibition shall apply during the period
of any such employee's employment by Lessor and for ninety (90) days thereafter.
The parties agree that it would be very difficult to ascertain the damages
stiffen by Lessor for Lessee's breach of the provision. Therefore, it is agreed
that in the event of a breach of this provision by Lessee, Lessee will pay to
Lessor as liquidated damages, and not as a penalty, a sum of money equal to
three (3) months pay for the subject employee at the rate paid by Lessor during
such employee's last full month employment by Lessor.
25. ATTORNEY'S FEES. In the event it becomes necessary for either party to
employ an attorney in order to enforce the terms of this Lease, or to protect
the rights of either party hereunder, and such party is successful in an action
in connection therewith, the other party agrees to pay such prevailing party the
reasonable attorney's fees and legal costs incurred.
26. RESTRICTION. Lessee will not bring, copier, postage meter, or other
equipment provided by Lessor for Lessee's benefit into the Suite without prior
written approval of Lessor.
27. COVENANT NOT TO COMPETE. Tenant agrees that during the terms of this Lease,
he shall not in or about the Premises, engage in the primary or incidental
business of providing photocopy service, facsimile receipt and transmissions,
secretarial services of any kind, or any similar services which are provided by
Lessor for the benefit of Its tenants.
28. SPECIAL CONDITIONS.
A. Targun Properties, Inc. will release National Scientific from Offices
#2 and #5 as of September 1, 1998. Targun Properties, Inc. offers
Office #25 to National Scientific as an alternative office, at the
monthly rent rate of $460.00 per month.
B. If, at any lime, National Scientific defaults on the new lease
agreement, National Scientific will be responsible for the monthly
rent of all four original offices (#2, 5, 23, & 24) rented in the
original lease agreement.
C. National Scientific may take possession of Office #25 approximately
September 1, 1998.
D. Tenant agrees to give Landlord the desk in #2 at no charge.
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LESSEE: LESSOR:
NATIONAL SCIENTIFIC CORPORATION TARGUN PROPERTIES, INC.
BY: /s/ VERNON TRAYLOR By: /s/ MICHAEL TARGUN
--------------------------------- ---------------------------------
VERNON TRAYLOR MICHAEL TARGUN
TITLE: Corp Secretary TITLE: PRESIDENT
SS.#/TAX ID 86-0837077
--------------------
HOME
ADDRESS:
--------------------
PHONE: 602-954-1492
--------------------
DATE: August 24, 1998
--------------------
9
LEASE ADDENDUM
This amendment supplements and amends the provisions of the Lease Agreement
dated August 21, 1998, by and between TARGUN PROPERTIES, INC. ("Lessor") and,
National Scientific Corporation ("Lessee"). In the event of any conflict or
inconsistency between the provisions of this Amendment and the provisions of the
Lease, this Amendment shall prevail.
18 MONTH LEASE EXTENSION
Offices #21, #23, #24
______ initials ______ initials
Effective Date: September 1, 1999 to February 28, 2001
Rent Rate: $2,300.00
Sales Tax: $ 43.70
---------
Total $2,342.70
Terms and conditions: Except to the extent inconsistent with the terms and
conditions set forth above, all the conditions and covenant of that certain
Lease Agreement dated AUGUST 21, 1998, as well as all exhibits, schedules,
attachments, addendums of clarifications shall be binding upon Lessor and
Lessee. This agreement shall not constitute an agreement by the Lessor and shall
not be binding upon Lessor unless and until the Agreement shall be executed by
both parties.
AGREED TO this 27 day of July, 1999.
LESSEE: LESSOR:
NATIONAL SCIENTIFIC CORPORATION TARGUN PROPERTIES, INC.
/s/ Vernon Traylor Jr. /s/ Michael Targun
- ----------------------------------- -----------------------------------
Michael Targun
Its: Agent Its: President
- ----------------------------------- -----------------------------------
LEASE ADDENDUM
This amendment supplements and amends the provisions of the Lease Agreement
dated August 21, 1998, by and between TARGUN PROPERTIES, INC. ("Lessor") and,
NATIONAL SCIENTIFIC CORPORATION ("Lessee"). In the event of any conflict or
inconsistency between the provisions of this Amendment and the provisions of the
Lease, this Amendment shall prevail.
LEASE EXTENSION UNTIL SEPTEMBER 30,2001
Effective Date: October 1, 1999
Rent Rate: $2300.00
Sales Tax: $ 43.70
--------
Total $2343.70
Terms and conditions: Except to the extent inconsistent with the ten and
conditions set forth above, all the conditions and covenant of Sat certain Lease
Agreement dated August 21, 1998, as well as all exhibits, schedules,
attachments, addendums of clarifications shall be binding upon Lessor and
Lessee. This agreement shall not constitute an agreement by the Lessor and shall
not be binding upon Lessor unless and until the Agreement shall be executed by
both parties.
AGREED TO this 15th day of September, 1999.
LESSEE: LESSOR:
NATIONAL SCIENTIFIC CORPORATION TARGUN
BY: /s/ VERNON TRAYLOR /s/ MICHAEL TARGUN
--------------------------------- ---------------------------------
VERNON TRAYLOR MICHAEL TARGUN
Its: Agent Its: PRESIDENT
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which we acknowledge receipt, we, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East
Spur Avenue, Gilbert, Arizona 85296, and MAJID M. HASHEMI, of 1030 E. El Camino
Real, No. 502, Sunnyvale, CA 94087, (the Inventors) hereby sell, and assign,
subject to the conditions set forth below, to NATIONAL SCIENTIFIC CORP., having
offices at 4455 E. Camelback Road, Suite E160, Phoenix, Arizona 85018, its
successors and assigns, the entire right, title and interest in and to the
improvements of HETEROJUNCTION BIPOLAR TRANSISTOR HAVING WIDE BANDGAP, LOW
INTERDIFFUSION BASE-EMITTER JUNCTION, (the Invention) invented by us, as
described in the application for United States Patent Application Serial No.
08/939,487 filed 29 September 1997 (M&G Docket Number 2238-010), and any and all
applications for patent and patents therefor in any and all countries, including
all divisions, reissues, continuations and extensions thereof, and all rights of
priority resulting from the filing of said United States application, and
authorize and request any official whose duty it is to issue patents, to issue
any patent on said improvements or resulting therefrom to said NATIONAL
SCIENTIFIC CORP., or its successors or assigns and agree that on request and
without further consideration, but at the expense of NATIONAL SCIENTIFIC CORP.,
we will communicate to said NATIONAL SCIENTIFIC CORP., or its representatives or
nominees, any facts known to us respecting said improvements and testify in any
legal proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid NATIONAL SCIENTIFIC CORP., its successors, assigns and nominees,
to obtain and enforce proper patent protection for said invention in all
countries. The above-discussed conditions are as follows: a) that NATIONAL
SCIENTIFIC CORP. pay all costs related to United States filing, prosecution,
issuance, and maintenance of United States Patent Application Serial No.
08/939,487, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees owed to
the inventors with respect to the Invention, c) that NATIONAL SCIENTIFIC CORP.
<PAGE>
ASSIGNMENT
S/N: 08/939,487
Page: 2
pay 1% of all gross sales related to the Invention to EL-BADAWY AMIEN
EL-SHARAWY, d) that NATIONAL SCIENTIFIC CORP. pay 1% of all gross sales related
to the Invention to MAJID M. HASHEMI, e) that NATIONAL SCIENTIFIC CORP. actively
develop and market the Invention, and f) that NATIONAL SCIENTIFIC CORP. remain
solvent as evidenced by refraining from filing for bankruptcy under U.S.
Bankruptcy law. Should any of the above-discussed conditions fail to be met,
then this Assignment shall be deemed void AB INITIO. The Inventors covenant with
said NATIONAL SCIENTIFIC CORP., its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that they
have full right to convey the same as herein expressed.
3/23/98 /s/ Lou Ross
- ------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 23 day of 1998, before me, the undersigned, personally appeared Lou
Ross, known to me to be the person whose name is subscribed to the within
instrument, and acknowledged to me that he executed the foregoing instrument for
the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor, Jr.
----------------------------------------
NOTARY PUBLIC
(SEAL)
[NOTARY SEAL]
<PAGE>
ASSIGNMENT
S/N: 08/939,487
Page: 3
3/31/98 /s/ El-Badawy Amien El-Sharawy
- ------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 31st day of March 1998, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Flora D. DeBeer
----------------------------------------
NOTARY PUBLIC
My Commission Expires July 22, 1999
(SEAL)
4-15-98 /s/ Majid M. Hashemi
- ------- ----------------------------------------
DATE MAJID M. HASHEMI
STATE OF California )
) ss
County of Santa Clara )
On this 15th day of April 1998, before me, the undersigned, personally
appeared MAJID M. HASHEMI, known to me to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Har R. Choi
----------------------------------------
NOTARY PUBLIC
(SEAL)
[NOTARY SEAL]
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which we acknowledge receipt, we, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East
Spur Avenue, Gilbert, Arizona 85296, and MAJID M. HASHEMI, of 1363 Corte Bonita,
San Jose CA 95120, (the Inventors) hereby sell, and assign, subject to the
conditions set forth below, to NATIONAL SCIENTIFIC CORP., having offices at 4455
E. Camelback Road, Suite E-160, Phoenix, Arizona 85018, its successors and
assigns, the entire right, title and interest in and to the improvements of
VERTICAL HETEROJUNCTION BIPOLAR TRANSISTOR, (the Invention) invented by us, as
described in the application for United States Patent (M&G Docket Number
2238-010), and any and all applications for patent and patents therefor in any
and all countries, including all divisions, reissues, continuations and
extensions thereof, and all rights of priority resulting from the filing of said
United States application, and authorize and request any official whose duty it
is to issue patents, to issue any patent on said improvements or resulting
therefrom to said NATIONAL SCIENTIFIC CORP., or its successors or assigns and
agree that on request and without further consideration, but at the expense of
NATIONAL SCIENTIFIC CORP., we will communicate to said NATIONAL SCIENTIFIC
CORP., or its representatives or nominees, any facts known to us respecting said
improvements and testify in any legal proceeding, sign all lawful papers,
execute all divisional, continuing and reissue applications, make all rightful
oaths and generally do everything possible to aid NATIONAL SCIENTIFIC CORP., its
successors, assigns and nominees, to obtain and enforce proper patent protection
for said invention in all countries. The above-discussed conditions are as
follows: a) that NATIONAL SCIENTIFIC CORP. pay all costs related to United
States filing, prosecution, issuance, and maintenance of United States Patent
Application, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees owed to
the inventors with respect to the Invention, c) that NATIONAL SCIENTIFIC CORP.
pay 1% of all gross sales related to the Invention to EL-BADAWY AMIEN
EL-SHARAWY, d) that NATIONAL SCIENTIFIC CORP. pay 1% of all gross sales related
to the Invention to MAJID M. HASHEMI, e) that NATIONAL SCIENTIFIC CORP. actively
<PAGE>
ASSIGNMENT
VERTICAL HETEROJUNCTION BIPOLAR TRANSISTOR
Page: 2
develop and market the Invention, and f) that NATIONAL SCIENTIFIC CORP. remain
solvent as evidenced by refraining from filing for bankruptcy under U.S.
Bankruptcy law. Should any of the above-discussed conditions fail to be met,
then this Assignment shall be deemed void AB INITIO. The Inventors covenant with
said NATIONAL SCIENTIFIC CORP., its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that they
have full right to convey the same as herein expressed.
11/16/99 /s/ Lou Ross
- -------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 16 day of November 1999, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
[NOTARY SEAL] /s/ Vernon M. Traylor Jr.
----------------------------------------
NOTARY PUBLIC
11/15/99 /s/ El-Badawy Amien El-Sharawy
- -------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
<PAGE>
ASSIGNMENT
VERTICAL HETEROJUNCTION BIPOLAR TRANSISTOR
Page: 3
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 15 day of November 1999, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
NOTARY PUBLIC
11/15/99 /s/ Majid M. Hashemi
- -------- ----------------------------------------
DATE MAJID M. HASHEMI
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 15 day of November 1999, before me, the undersigned, personally
appeared MAJID M. HASHEMI, known to me to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
[NOTARY SEAL] /s/ Vernon M. Traylor Jr.
----------------------------------------
NOTARY PUBLIC
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which we acknowledge receipt, we, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East
Spur Avenue, Gilbert, Arizona 85296, and MAJID M. HASHEMI, of 1030 E. El Camino
Real, No. 502, Sunnyvale, CA 94087, (the Inventors) hereby sell, and assign,
subject to the conditions set forth below, to NATIONAL SCIENTIFIC CORP., having
offices at 4455 E. Camelback Road, Suite E160, Phoenix, Arizona 85018, its
successors and assigns, the entire right, title and interest in and to the
improvements of MONOLITHIC INDUCTOR WITH MAGNETIC FLUX LINES GUIDED AWAY FROM
SUBSTRATE, (the Invention) invented by us, as described in the application for
United States Patent Application Serial No. 08/962,377 filed 31 October 1997
(M&G Docket Number 2238-020), and any and all applications for patent and
patents therefor in any and all countries, including all divisions, reissues,
continuations and extensions thereof, and all rights of priority resulting from
the filing of said United States application, and authorize and request any
official whose duty it is to issue patents, to issue any patent on said
improvements or resulting therefrom to said NATIONAL SCIENTIFIC CORP., or its
successors or assigns and agree that on request and without further
consideration, but at the expense of NATIONAL SCIENTIFIC CORP., we will
communicate to said NATIONAL SCIENTIFIC CORP., or its representatives or
nominees, any facts known to us respecting said improvements and testify in any
legal proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid NATIONAL SCIENTIFIC CORP., its successors, assigns and nominees,
to obtain and enforce proper patent protection for said invention in all
countries. The above-discussed conditions are as follows: a) that NATIONAL
SCIENTIFIC CORP. pay all costs related to United States filing, prosecution,
issuance, and maintenance of United States Patent Application Serial No.
08/962,377, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees owed to
the inventors with respect to the Invention, c) that NATIONAL SCIENTIFIC CORP.
pay 1% of all
<PAGE>
ASSIGNMENT
S/N: 08/962,377
Page: 2
gross sales related to the Invention to EL-BADAWY AMIEN EL-SHARAWY, d) that
NATIONAL SCIENTIFIC CORP. pay 1% of all gross sales related to the Invention to
MAJID M. HASHEMI, e) that NATIONAL SCIENTIFIC CORP. actively develop and market
the Invention, and f) that NATIONAL SCIENTIFIC CORP. remain solvent as evidenced
by refraining from filing for bankruptcy under U.S. Bankruptcy law. Should any
of the above-discussed conditions fail to be met, then this Assignment shall be
deemed void AB INITIO. The Inventors covenant with said NATIONAL SCIENTIFIC
CORP., its successors and assigns, that the rights and property hereby covered
are free and clear of any encumbrances, and that they have full right to convey
the same as herein expressed. 3/23/98 DATE Lou Ross
11/16/99 /s/ Lou Ross
- -------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 23 day of March 1998, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
[NOTARY SEAL] /s/ Vernon M. Traylor Jr.
----------------------------------------
NOTARY PUBLIC
<PAGE>
ASSIGNMENT
S/N: 08/962,377
Page: 3
3/31/95 /s/ El-Badawy Amien El-Sharawy
- ------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 31st day of March 1998, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Flora D. DeBeer
----------------------------------------
NOTARY PUBLIC
(SEAL) Commission Expires July 22, 1999
4-15-98 /s/ Majid M. Hashemi
- ------- ----------------------------------------
DATE MAJID M. HASHEMI
STATE OF CALIFORNIA )
) ss
County of Santa Clara )
On this 15th day of April 1998, before me, the undersigned, personally
appeared MAJID M. HASHEMI, known to me to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Hae R. Choi
----------------------------------------
NOTARY PUBLIC
(NOTARY SEAL)
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which we acknowledge receipt, we, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East
Spur Avenue, Gilbert, Arizona 85296, and MAJID M. HASHEMI, of 1363 Corte Bonita,
San Jose CA 95120, (the Inventors) hereby sell, and assign, subject to the
conditions set forth below, to NATIONAL SCIENTIFIC CORP., having offices at 4455
E. Camelback Road, Suite E-160, Phoenix, Arizona 85018, its successors and
assigns, the entire right, title and interest in and to the improvements of
MONOLITHIC INDUCTOR WITH MAGNETIC FLUX LINES GUIDED AWAY FROM SUBSTRATE, (the
Invention) invented by us, as described in the application for United States
Patent (M&G Docket Number 2238-020CIP), and any and all applications for patent
and patents therefor in any and all countries, including all divisions,
reissues, continuations and extensions thereof, and all rights of priority
resulting from the filing of said United States application, and authorize and
request any official whose duty it is to issue patents, to issue any patent on
said improvements or resulting therefrom to said NATIONAL SCIENTIFIC CORP., or
its successors or assigns and agree that on request and without further
consideration, but at the expense of NATIONAL SCIENTIFIC CORP., we will
communicate to said NATIONAL SCIENTIFIC CORP., or its representatives or
nominees, any facts known to us respecting said improvements and testify in any
legal proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid NATIONAL SCIENTIFIC CORP., its successors, assigns and nominees,
to obtain and enforce proper patent protection for said invention in all
countries. The above-discussed conditions are as follows: a) that NATIONAL
SCIENTIFIC CORP. pay all costs related to United States filing, prosecution,
issuance, and maintenance of United States Patent Application Serial No.
08/962,377, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees owed to
the inventors with respect to the Invention, c) that NATIONAL SCIENTIFIC CORP.
pay 1% of all gross sales related to the Invention to EL-BADAWY AMIEN
EL-SHARAWY, d) that NATIONAL
<PAGE>
ASSIGNMENT
M&G Docket: 2238-O2OCIP
Page: 2
SCIENTIFIC CORP. pay 1% of all gross sales related to the Invention to MAJID M.
HASHEMI, e) that NATIONAL SCIENTIFIC CORP. actively develop and market the
Invention, and Q that NATIONAL SCIENTIFIC CORP. remain solvent as evidenced by
refraining from filing for bankruptcy under U.S. Bankruptcy law. Should any of
the above-discussed conditions fail to be met, then this Assignment shall be
deemed void AB INITIO. The Inventors covenant with said NATIONAL SCIENTIFIC
CORP., its successors and assigns, that the rights and property hereby covered
are free and clear of any encumbrances, and that they have full right to convey
the same as herein expressed.
11/16/99 /s/ Lou Ross
- -------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 16 day of November 1999, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
11/15/99 /s/ El-Badawy Amien El-Sharawy
- -------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
<PAGE>
ASSIGNMENT
M&G Docket: 2238-O2OCIP
Page: 3
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 15 day of November 1999, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
[NOTARY SEAL]
NOTARY PUBLIC
11/15/99 /s/ Majid M. Hashemi
- -------- ----------------------------------------
DATE MAJID M. HASHEMI
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 15 day of November 1999, before me, the undersigned, personally
appeared MAJID M. HASHEMI, known to me to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
NOTARY PUBLIC
[NOTARY SEAL]
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which we acknowledge receipt, we, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East
Spur Avenue, Gilbert, Arizona 85296, and MAJID M. HASHEMI, of 1030 E. El Camino
Real, No. 502, Sunnyvale, CA 94087, (the Inventors) hereby sell, and assign,
subject to the conditions set forth below, to NATIONAL SCIENTIFIC CORP., having
offices at 4455 E. Camelback Road, Suite E160, Phoenix, Arizona 85018, its
successors and assigns, the entire right, title and interest in and to the
improvements of STATIC MEMORY CELL WITH LOAD CIRCUIT USING A TUNNEL DIODE, (the
Invention) invented by us, as described in the application for United States
Patent Application Serial No. 08/991,966 filed 17 December 1997 (M&G Docket
Number 2238-040), and any and all applications for patent and patents therefor
in any and all countries, including all divisions, reissues, continuations and
extensions thereof, and all rights of priority resulting from the filing of said
United States application, and authorize and request any official whose duty it
is to issue patents, to issue any patent on said improvements or resulting
therefrom to said NATIONAL SCIENTIFIC CORP., or its successors or assigns and
agree that on request and without further consideration, but at the expense of
NATIONAL SCIENTIFIC CORP., we will communicate to said NATIONAL SCIENTIFIC
CORP., or its representatives or nominees, any facts known to us respecting said
improvements and testify in any legal proceeding, sign all lawful papers,
execute all divisional, continuing and reissue applications, make all rightful
oaths and generally do everything possible to aid NATIONAL SCIENTIFIC CORP., its
successors, assigns and nominees, to obtain and enforce proper patent protection
for said invention in all countries. The above-discussed conditions are as
follows: a) that NATIONAL SCIENTIFIC CORP. pay all costs related to United
States filing, prosecution, issuance, and maintenance of United States Patent
Application Serial No. 08/991,966, b) that NATIONAL SCIENTIFIC CORP. pay all
consulting fees owed to the inventors with respect to the Invention, c) that
NATIONAL SCIENTIFIC CORP. pay 1% of all gross sales related to the Invention to
EL-BADAWY AMIEN
<PAGE>
ASSIGNMENT
S/N: 08/991,966
Page: 2
EL-SHARAWY, d) that NATIONAL SCIENTIFIC CORP. pay 1% of all gross sales related
to the Invention to MAJID M. HASHEMI, e) that NATIONAL SCIENTIFIC CORP. actively
develop and market the Invention, and f) that NATIONAL SCIENTIFIC CORP. remain
solvent as evidenced by refraining from filing for bankruptcy under U.S.
Bankruptcy law. Should any of the above-discussed conditions fail to be met,
then this Assignment shall be deemed void AB INITIO. The Inventors covenant with
said NATIONAL SCIENTIFIC CORP., its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that they
have full right to convey the same as herein expressed.
4/2/98 /s/ Lou Ross
- ------ ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 2 day of April 1998, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
<PAGE>
ASSIGNMENT
S/N: 08/991,966
Page: 3
4/16/98 /s/ El-Badawy Amien El-Sharawy
- ------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 16th day of April 1998, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Mary M. Sitter
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
4/27/98 /s/ Majid M. Hashemi
- ------- ----------------------------------------
DATE MAJID M. HASHEMI
STATE OF California )
) ss
County of Santa Clara )
On this 27th day of April 1998, before me, the undersigned, personally
appeared MAJID M. HASHEMI, known to me to be the person whose name is subscribed
to the within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Hae R. Choi
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which I acknowledge receipt, I, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East Spur
Avenue, Gilbert, Arizona 85296, (the Inventor) hereby sell, and assign, subject
to the conditions set forth below, to NATIONAL SCIENTIFIC CORP., having offices
at 4455 E. Camelback Road, Suite E160, Phoenix, Arizona 85018, its successors
and assigns, the entire right, title and interest in and to the improvements of
TE(OYS) MODE DIELECTRIC RESONATOR (the Invention) invented by me, as described
in the application for United States Patent Application filed herewith (M&G
Docket Number 2238-050), and any and all applications for patent and patents
therefor in any and all countries, including all divisions, reissues,
continuations and extensions thereof, and all rights of priority resulting from
the filing of said United States application, and authorize and request any
official whose duty it is to issue patents, to issue any patent on said
improvements or resulting therefrom to said NATIONAL SCIENTIFIC CORP., or its
successors or assigns and agree that on request and without further
consideration, but at the expense of NATIONAL SCIENTIFIC CORP., I will
communicate to said NATIONAL SCIENTIFIC CORP., or its representatives or
nominees, any facts known to me respecting said improvements and testify in any
legal proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid NATIONAL SCIENTIFIC CORP., its successors, assigns and nominees,
to obtain and enforce proper patent protection for said invention in all
countries. The above-discussed conditions are as follows: a) that NATIONAL
SCIENTIFIC CORP. pay all costs related to United States filing, prosecution,
issuance, and maintenance of the United States Patent Application filed
herewith, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees and/or other
consideration owed to the Inventor with respect to the Invention, c) that
NATIONAL SCIENTIFIC CORP. pay 2% of all gross sales related to the Invention to
the Inventor, d) that NATIONAL SCIENTIFIC CORP. actively develop and market the
Invention, and e) that NATIONAL SCIENTIFIC CORP. remain
<PAGE>
ASSIGNMENT
TE076 MODE DIELECTRIC RESONATOR
Page: 2
solvent as evidenced by refraining from filing for bankruptcy under U.S.
Bankruptcy law. Should any of the above-discussed conditions fail to be met,
then this Assignment shall be deemed void AB INITIO. The Inventor covenants with
said NATIONAL SCIENTIFIC CORP., its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that he has
full right to convey the same as herein expressed.
6/18/98 /s/ Lou Ross
- ------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 18 day of June 1998, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
<PAGE>
ASSIGNMENT
TE(OYS) MODE DIELECTRIC RESONATOR
Page: 3
6/18/95 /s/ El-Badawy Amien El-Sharawy
- ------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 18 day of June 1998, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
NOTARY PUBLIC
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which I acknowledge receipt, I, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East Spur
Avenue, Gilbert, Arizona 85296, (the Inventor) hereby sell, and assign, subject
to the conditions set forth below, to NATIONAL SCIENTIFIC CORP., having offices
at 4455 E. Camelback Road, Suite E160, Phoenix, Arizona 85018, its successors
and assigns, the entire right, title and interest in and to the improvements of
DISTRIBUTED AMPLIFIER AND METHOD THEREFOR, (the Invention) invented by me, as
described in the application for United States Patent Application filed herewith
(M&G Docket Number 2238-030), and any and all applications for patent and
patents therefor in any and all countries, including all divisions, reissues,
continuations and extensions thereof, and all rights of priority resulting from
the filing of said United States application, and authorize and request any
official whose duty it is to issue patents, to issue any patent on said
improvements or resulting therefrom to said NATIONAL SCIENTIFIC CORP., or its
successors or assigns and agree that on request and without further
consideration, but at the expense of NATIONAL SCIENTIFIC CORP., I will
communicate to said NATIONAL SCIENTIFIC CORP., or its representatives or
nominees, any facts known to me respecting said improvements and testify in any
legal proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid NATIONAL SCIENTIFIC CORP., its successors, assigns and nominees,
to obtain and enforce proper patent protection for said invention in all
countries. The above-discussed conditions are as follows: a) that NATIONAL
SCIENTIFIC CORP. pay all costs related to United States filing, prosecution,
issuance, and maintenance of the United States Patent Application filed
herewith, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees and/or other
consideration owed to the Inventor with respect to the Invention, c) that
NATIONAL SCIENTIFIC CORP. pay 2% of all gross sales related to the Invention to
the Inventor, d) that NATIONAL SCIENTIFIC CORP. actively develop and market the
Invention, and e) that NATIONAL SCIENTIFIC CORP. remain
<PAGE>
ASSIGNMENT
DISTRIBUTED AMPLIFIER AND METHOD THEREFOR
Page: 2
solvent as evidenced by refraining from filing for bankruptcy under U.S.
Bankruptcy law. Should any of the above-discussed conditions fail to be met,
then this Assignment shall be deemed void AB INITIO. The Inventor covenants with
said NATIONAL SCIENTIFIC CORP., its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that he has
full right to convey the same as herein expressed.
July 10, 1998 /s/ Lou Ross
- ------------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 10 day of July 1998, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
<PAGE>
ASSIGNMENT
DISTRIBUTED AMPLIFIER AND METHOD THEREFOR
Page: 3
7/8/98 /s/ El-Badawy Amien El-Sharawy
- ------ ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 8th day of July 1998, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Mary M. Sittu
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
ASSIGNMENT
In consideration of Ten Dollars ($10.00) and other valuable consideration,
of which I acknowledge receipt, I, EL-BADAWY AMIEN EL-SHARAWY, of 1434 East Spur
Avenue, Gilbert, Arizona 85296, (the Inventor) hereby sell, and assign, subject
to the conditions set forth below, to NATIONAL SCIENTIFIC CORP., having offices
at 4455 E. Camelback Road, Suite E160, Phoenix, Arizona 85018, its successors
and assigns, the entire right, title and interest in and to the improvements of
DIELECTRIC RESONATOR (the Invention) invented by me, as described in the
application for United States Patent Application filed herewith (M&G Docket
Number 2238-O5OCIP1), and any and all applications for patent and patents
therefor in any and all countries, including all divisions, reissues,
continuations and extensions thereof, and all rights of priority resulting from
the filing of said United States application, and authorize and request any
official whose duty it is to issue patents, to issue any patent on said
improvements or resulting therefrom to said NATIONAL SCIENTIFIC CORP., or its
successors or assigns and agree that on request and without further
consideration, but at the expense of NATIONAL SCIENTIFIC CORP., I will
communicate to said NATIONAL SCIENTIFIC CORP., or its representatives or
nominees, any facts known to me respecting said improvements and testify in any
legal proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid NATIONAL SCIENTIFIC CORP., its successors, assigns and nominees,
to obtain and enforce proper patent protection for said invention in all
countries. The above-discussed conditions are as follows: a) that NATIONAL
SCIENTIFIC CORP. pay all costs related to United States filing, prosecution,
issuance, and maintenance of the United States Patent Application filed
herewith, b) that NATIONAL SCIENTIFIC CORP. pay all consulting fees and/or other
consideration owed to the Inventor with respect to the Invention, c) that
NATIONAL SCIENTIFIC CORP. pay 2% of all gross sales related to the Invention to
the Inventor, d) that NATIONAL SCIENTIFIC CORP. actively develop and market the
Invention, and e) that NATIONAL SCIENTIFIC CORP. remain
<PAGE>
ASSIGNMENT
DIELECTRIC RESONATOR
Page: 2
solvent as evidenced by refraining from filing for bankruptcy under U.S.
Bankruptcy law. Should any of the above-discussed conditions fail to be met,
then this Assignment shall be deemed void AB INITIO. The Inventor covenants with
said NATIONAL SCIENTIFIC CORP., its successors and assigns, that the rights and
property hereby covered are free and clear of any encumbrances, and that he has
full right to convey the same as herein expressed.
12/18/98 /s/ Lou Ross
- -------- ----------------------------------------
DATE Lou Ross
Chairman and C.E.O.
NATIONAL SCIENTIFIC CORP.
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 18 day December 1998, before me, the undersigned, personally
appeared Lou Ross, known to me to be the person whose name is subscribed to the
within instrument, and acknowledged to me that he executed the foregoing
instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Vernon M. Traylor Jr.
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
<PAGE>
ASSIGNMENT
DIELECTRIC RESONATOR
Page: 3
12/18/98 /s/ El-Badawy Amien El-Sharawy
- -------- ----------------------------------------
DATE EL-BADAWY AMIEN EL-SHARAWY
STATE OF ARIZONA )
) ss
County of Maricopa )
On this 18 day of December 1998, before me, the undersigned, personally
appeared EL-BADAWY AMIEN EL-SHARAWY, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged to me that he executed the
foregoing instrument for the purposes therein contained.
IN WITNESS WHEREOF, We have set my hand and official seal.
/s/ Jeannette A. Ochoa
----------------------------------------
[NOTARY SEAL] NOTARY PUBLIC
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